FX.co ★ UK Construction Activity Growth Fastest Since Early 2022

In September, UK construction activity surged to its highest level of growth in nearly two-and-a-half years, driven by increased output and new order growth, as indicated by survey data from S&P Global released on Friday. This growth comes amid declining interest rates.

The construction Purchasing Managers' Index (PMI) climbed to 57.2 in September from 53.6 in August. Analysts had predicted a more modest increase to 53.1. The index has now held above the neutral threshold of 50.0 for seven consecutive months, signifying the most substantial growth rate observed in 29 months.

Growth was observed across all three construction sub-sectors, with civil engineering emerging as the strongest performer. Commercial building activity also accelerated, achieving its highest output increase since May.

Survey respondents attributed the positive momentum in client spending to lower borrowing costs and domestic political stability. Additionally, improved market conditions and increased confidence bolstered house building in September. Residential work increased at the fastest rate since March 2022, according to the survey.

Total new orders reached the highest growth in two-and-a-half years in September, prompting firms to hire more staff. Input buying rose at one of the fastest rates seen since early 2022, and supplier delivery times continued to improve in September.

Input prices saw their steepest rise since May 2023, although rates charged by subcontractors increased only marginally and at the slowest pace observed in 2024. Despite experiencing a slight downturn, business activity expectations for the year ahead remained optimistic in September, reaching their lowest level since April.