Construction activity in the UK picked up in April, data showed on Friday, adding to evidence that the economy has improved in the past month even as the number of new businesses hit a record high.
The S&P Global/Cips UK Construction Purchasing Managers’ Index, a measure of the health of the industry, rose to 51.1 in April from 50.7 in March. A reading above 50 indicates a majority of companies reporting expansion.
Tim Moore, chief economics officer at S&P Global Market Intelligence, said the construction sector “extended its current phase of expansion to three months in April, signaling a modest rebound from the slowdown seen at the start of the year.” .
On Thursday, the same index covering the services sector rose more than originally expected for April and to the highest level in 12 months.
Martin Beck, chief economic adviser at the EY Item Club, an advisory firm, said the rise in the construction and services PMI indices suggested the economy was “turning a corner”. While strikes and cost of living crisis continues to hold back growth, he added, the data points to an improvement in the underlying performance of the economy.
Growth in the construction sector last month was supported by a decrease in supply chain disruptions, which have eased to the greatest extent since September 2009. This decline has helped reduce price pressures inputs, with cost inflation at its lowest level in almost two and a half years. six months, according to Friday’s data.
The expansion in activity, driven by commercial construction, was helped by stabilizing domestic economic conditions and a gradual rebound in business confidence. Civil engineering activity also picked up in April, supported by resilient infrastructure projects.
By contrast, housing construction was by far the worst performing segment in April, recording the steepest rate of decline in nearly three years.
Moore said the drop was due to “a considerable headwind from high mortgage rates and weak demand,” adding that while there have been some signs of a recent stabilization in market conditions, this had “not yet been passed on to construction activity”.
Separate figures released by the Office for National Statistics on Friday showed a decline in business start-ups in the UK.
According to the agency, around 79,000 businesses were created in the first three months of 2023, down 22% from the same period in 2022 and the lowest level for the first quarter since data collection began. of data in 2017.
The figures, which cover businesses subject to VAT or employing staff and paying via PAYE, excluding sole proprietors and the self-employed, showed declines across the 16 major industry groups in the first quarter compared to the same period last year.
The transport and warehousing sector saw the largest decline, with new business numbers down 5,700, or 52%, from the first quarter of 2022. The ONS said the fall in the sector in over the past four quarters was partly explained. by its growth spurt at the height of the pandemic.
Craig Beaumont, head of external affairs at the Federation of Small Businesses, a trade body, said the figures laid bare “the legacy of two years of Covid, a year of energy crisis and the economic crisis we’ve had” , and that many entrepreneurs were waiting for more stable conditions.
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