Construction continued to expand in April but growth remained very sluggish. At 51.1, the sector PMI was just a tick firmer than the market consensus, only 0.4 points stronger than in March and not much higher than the 50-expansion threshold.

Moreover, at a sector level it was a very mixed performance. Hence, while commercial work (53.9) enjoyed its second-best month since October 2022 and civil engineering (52.0) also made further progress, house building (43.0) contracted at the fastest rate in almost three years.

Still, aggregate new orders rose again and at a faster pace than in March and this contributed to another moderate increase in overall headcount. Input buying also expanded, albeit at only a marginal pace, and a combination of improved supply and relatively subdued demand helped purchase price inflation to slow to its lowest rate since November 2020. Construction companies also anticipate a further increase in business activity in the year ahead although the degree of confidence edged down to a 3-month low.

In sum, the April results are nothing to write home about and the acute weakness of the residential sector is clearly an issue. Nonetheless, in the face of sharply higher interest rates, overall activity has held up relatively well. This is also true of the economy in general and reflected in an ECDI of 36 and an ECDI-P of 33. Both readings are well in positive surprise territory.

The sector PMI is expected to improve 0.3 points to 51.0 in April.

The Construction Purchasing Managers' Index (PMI) provides an estimate of business activity in the UK construction sector for the preceding month based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 170 construction companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on the regional and industry contribution to gross domestic product. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

The survey is based on techniques successfully developed in the USA over the last 60 years by the National Association of Purchasing Management. It is designed to provide one of the earliest indicators of significant change in the economy. The data collected are not opinion on what might happen in the future, but hard facts on what is actually happening at 'grass roots' level in the economy. As such the information generated on economic trends pre-dates official government statistics by many months.