UK construction made a surprisingly good start to the quarter. At 53.0, the sector PMI was nearly 2 points stronger than the market consensus and almost 3 points above its March reading. The latest outturn signalled the strongest pace of expansion since February 2023.

Commercial building (53.9) increased for the first time since last August and civil engineering (53.6) was not far behind. However, house construction (47.6) declined again and by the most since January.

Aggregate new orders increased for a third successive month but only modestly and by less than in March. Headcount was cut again, albeit only marginally, and sub-contractor availability increased sharply despite the first rise in usage so far in 2024. Suppliers' delivery times shortened for the 14th consecutive month and by the most since December 2023 and, while input costs rose for a fourth time in as many months, the inflation rate declined and was well below its long-run rate. Business sentiment remained optimistic and was slightly firmer than previously.

In sum, the April data offer promising pointers for overall construction although the improvement could be better balanced. In any event, today's report is unlikely to have much impact upon this week's BoE MPC meeting which is widely expected to leave policy on hold. The UK RPI remains at minus 4 and the RPI-P at 10. Economic activity in general is essentially matching forecasts although the real economy continues to lag slightly.

The sector index is expected to rise from 50.2 in March to 51.1

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.