UK construction sees sharpest jump since 2014 in March – IHS Markit

British construction activity grew at the fastest pace since 2014 last month, boosted by a restart in postponed hospitality, leisure and office projects as COVID-19 restrictions start to ease, a monthly survey showed on Thursday.

The IHS Markit/CIPS construction Purchasing Managers’ Index jumped to 61.7 in March from 53.3 in February, its highest reading since September 2014 and well above the increase to 54.6 forecast in a Reuters poll of economists. Any reading above 50 represents growth.

“Improving confidence among clients in the commercial segment was a key driver of growth, with development activity rebounding in sectors of the economy set to benefit the most from the improving pandemic situation,” said IHS Markit economics director Tim Moore.

House-building has shown strong growth, bolstered by rapid house price growth despite the pandemic, as richer households sought more space to work from home and the government cut taxes on house purchases.

But March’s data also showed a sharp pick-up in commercial activity – such as offices and shop and restaurant refits – and for bigger civil engineering projects.

“The increasingly optimistic UK economic outlook has created a halo effect on construction demand and the perceived viability of new projects,” Moore said.

Non-essential shops in England will reopen next week after being shut since early January, and pubs and restaurants will also start serving again – initially outside only.

On Tuesday the International Monetary Fund revised up its growth forecast for Britain in 2021 to 5.3%.

Last year the economy as a whole shrank by 9.8%, and construction output – which was less affected by COVID-19 restrictions than other sectors – dropped by 5.9%.

Thursday’s data showed that hiring in the construction sector rose at its fastest pace in more than two years, and raw material costs saw their biggest jump since 2008, which firms blamed on disruptions linked to Brexit and the pandemic.