Invezz.com - The UK construction sector saw substantial growth in September, with the Construction Purchasing Managers’ Index (PMI) rising to 57.2—the highest in 29 months, according to a report by S&P Global and the Chartered Institute of Purchasing & Supply (CIPS).
This figure exceeded analysts’ expectations and marked the seventh consecutive month of expansion in the sector.
The surge in construction output was primarily driven by civil engineering and commercial building, with infrastructure projects leading the charge.
The report pointed to economic stability, lower interest rates, and a rise in new orders as key drivers of this growth.
This rebound follows a period of stagnation earlier in the year, signaling renewed optimism in the construction industry, particularly in infrastructure-heavy sectors like civil engineering.
Commercial building also contributed significantly, fueled by strong demand for office spaces and retail developments. In contrast, residential construction remained sluggish due to ongoing market uncertainties.
Civil engineering boosts UK construction output by record margins
Civil engineering stood out as the strongest performer in the UK construction industry in September, with its sub-index reaching a 29-month high.
This robust recovery made a significant contribution to overall construction output.
Public sector investments, particularly in transportation networks and energy infrastructure, played a major role in driving demand.
Local governments have ramped up spending in these areas to stimulate regional economies.
The report highlighted that a steady pipeline of infrastructure projects has been central to this resurgence.
Large-scale transport initiatives and renewable energy projects, in particular, are solidifying civil engineering’s role as a key driver of the UK’s economic recovery.
Commercial construction hits new highs as demand grows
Commercial construction saw its largest rise in output since May, fueled by growing demand for office spaces, shopping centers, and mixed-use developments.
This demand has been driven by both domestic and international investors, as businesses seek to reposition themselves in the wake of pandemic disruptions.
While office space requirements remain below pre-pandemic levels, the shift toward hybrid working has sparked demand for more flexible and adaptable work environments.
At the same time, the recovery in consumer confidence has boosted demand for retail spaces, providing additional momentum for commercial construction growth.
Residential construction remains sluggish despite broader gains
Despite the strong performance in civil and commercial construction, residential building activity remained the weakest sector in September. Continued market uncertainty, particularly regarding housing affordability and mortgage availability, has dampened the demand for new housing projects.
Although there have been modest gains in some regions, residential construction has largely lagged behind the overall growth in the sector. Rising costs of materials and ongoing labour shortages have further constrained residential projects, causing developers to delay or scale down housing plans.
Will growth continue into the final quarter?
The near-term outlook for the UK construction industry remains positive, especially in the civil engineering and commercial sectors. With infrastructure projects showing no signs of slowing down and commercial real estate gaining momentum, the sector is well-positioned for further expansion.
Residential construction remains a cause for concern, and its recovery may depend on changes in mortgage rates and market sentiment.
As the UK economy continues to stabilise, the construction sector’s sustained growth could provide much-needed support. Whether this trend will continue in the fourth quarter remains to be seen, but the signs point to further gains.