The construction sector just about kept its head above water in March. The PMI weighed in at 50.2, up from February's 49.7 and on the right side of the 50-expansion threshold for the first time in seven months. The latest reading was also a little firmer than the market consensus.

Civil engineering was the best performing subsector, posting positive growth as both house building and commercial construction broadly stagnated.

Aggregate new orders increased for a second successive month and by the most in 10. However, headcount was cut, albeit only marginally, and sub-contractor usage was only flat. Suppliers' delivery times shortened for the 13th consecutive month and while input costs rose for a third time in as many months, the inflation rate declined and was only marginal. Business sentiment remained optimistic but eased versus February and was the weakest so far in 2024. Political uncertainty and squeezed margins had a negative effect.

Still, the March data should underpin expectations that the construction sector is on the turn, further easing pressure on the BoE for an early cut in Bank Rate. Indeed, while the UK RPI (minus 4) is just in negative surprise territory, the RPI-P (15) shows real economic activity running slightly ahead of forecasts.

The sector PMI is expected to move up from 49.7 in February to match the 50-expansion threshold.

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.