IHS Markit’s Construction PMI reaches 64.2% in May, above economists’ expectations
The construction sector grew at its quickest rate in close to seven years last month as the easing of lockdown restrictions caused a surge in new orders.
The IHS Markit’s Construction Purchasing Managers’ Index expanded by 0.6% to 64.2% in May, reaching its highest point since September 2014.
It also surpassed economists’ expectations of 62.3. Any recording higher than 50 is a sign of growth.
Growth was particularly strong in housebuilding, as house prices soared by more than 10% during May on an annual basis.
Housebuilding was followed by commercial jobs which saw its strongest level of growth since August 2007.
“UK construction companies reported another month of rapidoutput growth amid a surge in residential work and the fastest rise in commercial building since August 2007,” Tim Moore, economics director at IHS Markit, said.
Pressure on costs also intensified for construction firms at the fastest pace since records began, following a jump in supplier delivery times.
“Despite severe challenges with materials availability, construction firms remain highly upbeat about their near-term growth prospect,” Moore said.
Additional data is showing that Britain is on a path for a strong rebound in growth. Other surveys for the manufacturing and services sectors are suggesting that the UK economy is now partaking in broad-based growth.
The all-sector PMI, a combination of the PMI surveys for construction, manufacturing and services, jumped by 2.2% in May, its highest ever recording.
Employment growth in the construction industry remains at its highest level since 2014, as demand for staff reached record highs in May.
On the other hand, Howard Archer, chief economic advisor to the EY ITEM Club, gave a warning about what the data could mean: “Stretched supply chains and rises in raw material prices led to input prices rising at the fastest rate in the survey’s history of just over 24 years.”
“This will undoubtedly add to mounting inflationary concerns.”