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Construction growth rebounds after battering by Beast from the East

Economists warned that growth remained subdued in April despite recovering after the cold weather.

Output in the UK construction industry rebounded in April after having taken a battering from the Beast from the East in March.

The Markit/CIPS UK Construction purchasing managers’ index (PMI) rose to 52.5 last month, up from 47 in March.

Economists were expecting a figure of 50.5.

A reading above 50 indicates growth.

Activity rose at its fastest pace for five months, with residential house-building showing the strongest growth since May 2017.

However, the report showed that demand in the sector remained subdued, and new work increased only marginally, although employment numbers rose for the 21st month in a row.

Sterling was up 0.22% against the US dollar to 1.364 following the announcement. Against the euro, the pound rose 0.14% to 1.136.

Tim Moore, associate director at IHS Markit, which compiled the report, said: “A rebound in construction activity was pretty well inevitable after snowfall resulted in severe disruptions on site during March.

“House-building led the way, with growth in April among the strongest seen over the past two-and-a-half years.

“However, the picture was less positive in other areas of construction, with commercial building and civil engineering work rising only marginally.”

Supply chains remained under pressure, with low stock and transport issues contributing to longer delivery times for materials.

Input cost inflation remained at the 20-month low recorded in March. The main contributors to price rises were higher fuel costs and increase in prices on steel-related products.

The data comes after separate figures from the manufacturing sector showed activity fall to a 17-month low, which knocked sterling on Tuesday.

Howard Archer, chief economic adviser of the EY Item Club, said the survey was “hardly stellar” and that it would not dispel concerns about the health of the industry, especially as new orders growth remained low.

He said the weak performance from the construction sector in January also suggested that the industry’s problems ran deeper than the bad weather it encountered in February and March.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The long investment time horizons for both commercial and civil engineering projects mean that both sectors likely will remain depressed until some clarity emerges over the UK’s long-term relationship with the EU.

“In addition, the construction sector will be hurt by a planned 5.4% year-over-year reduction in public sector gross investment in this fiscal year.

“As a result, the odds of the construction sector enjoying a sustained recovery this year still look remote.”

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