UK construction activity essentially stagnated in February. At 49.7, the sector PMI was just 0.3 points short of the 50-expansion threshold and 0.5 points above the market consensus. It was also up from January's 48.8 and at its highest level since last August.

All of the three main subsectors saw activity broadly unchanged versus the start of the year. In particular, the housing sub-index (49.8 after 44.2) recorded a marked improvement to hit its best mark since November 2022, in line with other indicators suggesting that this category is now well past its low point.

Aggregate new orders actually increased for the first time in seven months although while another fall in employment was only small, it was still the steepest since November 2020. In part this seemed to reflect a reluctance to replace departing workers due to rising wages. Suppliers' lead times shortened further despite some knock-on effects from disruptions to traffic in the Red Sea but cost pressures increased for a second straight month. Even so, business optimism improved for the third time in the past four months and was the highest since January 2022.

Overall, the February data hold out hope that the construction sector is on the turn and should be seen as another reason for supposing that the BoE will be in no rush to cut Bank Rate. Indeed, today's report keeps both the UK RPI (29) and RPI-P (25) well in positive surprise territory.

Expectations are for the headline index to rise from 48.8 to 49.2.

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.