Construction PMI: Construction activity ticks up slightly in March

According to the latest PMI data by S&P and CIPS, the headline for March saw a slight increase at 46.4, up from 44.6 in February, masked by rise in housing and a fall in civil engineering and commercial activity. This comes off the back of activity reaching its lowest level since May 2020 last month. 

Although we saw housing activity tick up to 44.7 after a downward trend over the last five months, commercial activity fell to 47.4 and civil engineering was down at 38.8 – creating a drag on growth for March. 

Kelly Boorman, National Head of Construction at 91探花, said: “Despite increased housing activity, there is still a lack of confidence in the market. The market continues to be optimistic around future growth, but there remains uncertainty of when projects will be mobilised with some major infrastructure projects being shelved in the last quarter of 2024 and early 2025. 

“Housing stock has fallen in the last three years, and we are only just seeing a recovery in volumes, but this spring could be a turning point for the housing market. As real wages continue to grow, consumers might feel more confident to buy. In addition, strong rent returns and future property price increases is catching the eye of international investors where many are happy to take a higher rate of interest for potential long-term gains. 

“The government reaffirmed its direction of travel regarding housebuilding in the recent Spring Statement highlighting it as a lever for long-term economic growth and announcing a renewed focus on addressing the construction industry’s labour shortage which is critical to meeting the ambitious 1.5m new homes target. Along with the urgency to complete on houses to take advantage of the higher stamp duty thresholds.  

“The combination of domestic and international investment, with government support to tackle the skills gap and remove red tape, should stimulate the housing market in 2025.

“However, the fall in civil engineering activity signals ongoing concern that there’s a major lag in project mobilisation which is causing uncertainty. Delays and cancellations of large-scale infrastructure projects creates a huge headache for the industry and without government intervention to accelerate mobilisation of major projects and commit funding for delivery, some contractors will find it hard to remain viable.”

She added: “Trump’s ‘Liberation Day’ tariffs may not acutely hit the construction sector when compared to other industries, but the ripple effect will be felt across all businesses. It creates more uncertainty and could hit growth, so businesses need to plan ahead by considering diversification of material suppliers, reviewing procurement processes, investing in technology and focusing on working capital management to mitigate any potential risks.”