The UK’s construction industry has returned to growth after six consecutive months of decline, according to a closely watched survey.

A boost in civil engineering and a stabilisation in housebuilding helped drive the recovery, S&P Global found.

The firm’s purchasing managers index (PMI) score, calculated using the survey results, rose to 50.2 in March.

The figure is up from 49.7 in February and is the highest since August last year. Any score above 50 represents growth in the sector.

Tim Moore, economics director at S&P Global, said the near-term outlook for the industry “appears increasingly favourable as order books improved again in March”.

He added: “Construction companies generally commented on a broad-based rebound in tender opportunities, helped by easing borrowing costs and signs that UK economic conditions have started to recover in the first quarter of 2024.”

However, Mr Moore said hiring remained a weak spot, with “lingering concerns about margin pressures and continued risk aversion among major clients”.

“Construction firms often reported delays with replacing departing staff, which led to a decrease in total employment numbers for the third month in a row,” he added.

S&P Global said the survey found that supply chain pressures had also eased.

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Earlier this week a similar survey of the UK’s manufacturing industry concluded it had returned to growth for the first time in 20 months, amid signs the economy is gradually recovering from the impact of high inflation last year.

It comes after the Competition and Markets Authority (CMA) warned that the UK had seen a “persistent under delivery” of new homes.

The regulator, which launched an investigation into eight major housebuilders earlier this year, said the gap between what private developers are building and what people need has been widening.

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Commenting on Friday’s PMI figures, Matthew Pointon from Capital Economics said: “Falling interest rates should lead to a gradual rise in construction activity over the next year.

“The slight rise in the housing activity balance, from [a score of] 49.8 in February to 49.9 in March, took it to its highest level since November 2022 and implies housing construction has now stabilised.

“We think this reflects the drag from tighter building regulations introduced in June last year fading and a recovery in demand as mortgage rates have eased.”

He added: “While rates have edged up more recently, which will temper the recovery in construction, NHBC [National House Building Council] data show starts are now recovering from the lows reached in the second half of last year.”

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