UK construction rebounds from lockdown in June - PMI

FILE PHOTO: The City of London financial district can be seen in London, Britain, March 9 2020. REUTERS/Henry Nicholls/File Photo

LONDON (Reuters) - Growth returned to British construction companies in June for the first time since the coronavirus lockdown began, albeit from low levels, a business survey showed on Monday.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) rebounded to 55.3 from 28.9 in May, its highest since July 2018 and well above the 50 threshold for growth.

Data company IHS Markit said growth was driven mostly by housebuilders, but commercial and civil engineering construction companies also reported an increase in activity.

“As the first major part of the UK economy to begin a phased return to work, the strong rebound in construction activity provides hope to other sectors that have suffered through the lockdown period,” Tim Moore, economics director at IHS Markit, said.

The survey is designed to show which way business activity shifted during a month rather than its overall level. That means a return to a reading above 50 does not indicate a recovery to normal levels of construction output.

“While some survey respondents commented on cautious optimism about their near-term prospects, construction companies continued to face challenges securing new work against an unfavourable economic backdrop and a lost period for tender opportunities,” Moore said.

They also continued to cut jobs at a fast pace, the survey showed.

Construction accounts for only about 7% of British economic output. A PMI survey last week painted a gloomier picture of the services sector, which is about 10 times larger. [GB/PMIS]

The all-sector PMI - which combines the services, manufacturing and construction sectors - rose to 48.3 in June from 29.9 in May.

Reporting by Andy Bruce; Editing by Hugh Lawson