Experts are celebrating what they describe as a "real recovery" in the construction industry following the latest data showing the fastest growth rate since May 2022. In July, S&P Global UK Construction Purchase Manager's Index surged to 55.3 from June's 52.2. This signifies that there has been a strong recovery from previous downturns with this being the fifth straight rise in the month and an index showing total industry activity above neutral mark of 50 which means continued expansion.
Signs of a Recovery Amid Concerns
MHA Brendan Sharkey, a construction partner, talked about these positive trends saying that the industry has grown "from green shoots to proper recovery." He explained that ease in interest rates, better supply chain management systems, competition pricing and reduction on labor shortage are some of the reasons behind such an upturn. However, he also showed concern over major infrastructure project cancellations like Stonehenge tunnel and government spending cuts which might overshadow these recent gains.
According to Lloyds Bank's director of infrastructure and construction Max Jones; contractors are now becoming more confident so they decide to put their money into growing their firms through technology thus making them sustainable. It is believed by Jones that this action may help improve new work pipelines which shall enhance construction industry future economic growth.
Civil Engineering Leads the Growth
The greatest growth was experienced in civil engineering, while both commercial activity and housing sectors also improved last month. Revitalization of hitherto stalled projects has been made possible by surging new orders and increased customer confidence. The sector is further recovering with more hiring and significant increase in purchasing activity over two years period.
Said growth in civil engineering is also reflected in the increased construction spending. In June 2024, U.S. construction spending was estimated at a seasonally adjusted annual rate of $2,148.4 billion, slightly down by 0.3% from May but up 6.2% compared to June 2023. For the first half of the year, construction spending totaled $1,034.8 billion, an 8.6% increase from the same period in 2023.
Private construction spending was at a $1,664.6 billion annual rate in June, down 0.3% from May. Residential construction was $928.0 billion, also down by 0.3%, while nonresidential construction was $736.6 billion, down 0.1%.
Meanwihile, public construction spending was $483.9 billion in June, 0.4% below May's figure. Educational construction was $101.9 billion, down 0.9%, and highway construction was $143.5 billion, down 0.4%.
Future Growth and Government Influence
Technical director Thomas & Adamson Jordan Smith expressed his hope for more general industry growth supported by potential plans from the new government. He observed that even though there have been some uneven recoveries, new projects have focused on specific areas such as refurbishment and public sector works. It is believed that an increase in spending may be distributed more widely across different sectors and regions.
Jennie Jones of Brabners also backed the optimism by stressing that the construction sector is key to driving the economy forward. She indicated that a stable economic environment must be maintained by the new government whilst investment should be made for infrastructure projects to help keep it moving along this path of growth in support of its continued revival.
