Manufacturing grows and construction takes a hit in the UK

New data shows that manufacturing kept growing last month, but construction fell.

Manufacturing kept growing in the UK last month, according to new data, but construction did not manage to equal its success.

The Markit/CIPS Purchasing Managers’ Index (PMI), published yesterday (May 1st), gave a score of 57.3 for the manufacturing sector in April, compared to a score of 55.8 obtained in March. That represented one of the strongest readings of the past three years – and since any figure over 50 indicates growth, it suggests that the UK’s manufacturers are performing well as the economy recovers.

Output jumped to its highest level in eight months, while a healthy supply of new orders came to fill manufacturers’ order books with rising demand both at home and overseas. New business from foreign buyers jumped for the thirteenth month in a row thanks to growing appetites in other recovering economies.

Encouragingly, the improvement also bore fruit to create more jobs for UK workers. Employment rose for the 12th consecutive month so firms could expand their capacity to cope with new demand. Many firms are even clearing backlogs from previous months where it was not possible to meet the influx of custom.

But although the construction industry is also growing, the pace is slowing down. The Construction PMI recorded another improvement in total construction activity, but acknowledged that growth in April was the slowest since October. As a result, the Construction PMI score for last month was 60.8 – still higher than the figure in manufacturing, but lower than the 62.5 reported in March.

Considering the UK’s serious housing supply shortage, it is reassuring that housebuilding is one of the types of construction activity performing strongest. In fact, the nation has now had 15 months of continuous growth in this sector, the report says, which is the longest period since 2006-7. Instead, it was vendor performance that made the difference as supply chain issues persisted, while civil engineering also eased slightly.

“Set against the tightening supply chain backdrop, a difficult challenge lies ahead for the housebuilding sector to make sure it doesn’t hit a ‘brick ceiling’”, said Tim Moore, Markit senior economist.

But he added that overall, the sector’s prospects still look positive.

“Better economic conditions, a surge in house building, improved access to finance and greater investment spending are all important tailwinds for UK construction growth this year,” he said