The UK’s construction industry appears to be in the early stages of a “strong recovery”, a closely watched survey has suggested.

Last month the sector grew at its fastest pace in more than two years as it experienced a rebound in new housing projects, according to the poll by S&P Global.

It came following a slight slowdown in June, which was blamed on cautious firms being reluctant to commit to major projects while they awaited the outcome of the general election.

S&P Global’s purchasing managers’ index (PMI) score for the industry, calculated from the survey’s results, leapt to 55.3 in July.

The figure, which is significantly above forecasts and represented a fifth consecutive month of growth, is up from 52.2 in June. Any score above 50 represents growth in the sector.

Andrew Harker, economics director at S&P Global, said: “The election-related slowdown in growth seen in June proved to be temporary, with the pace of expansion roaring ahead in July.

“Firms saw the strongest increases in new orders and activity since 2022 as paused projects were released amid reports of improved customer confidence.”

The report, based on a survey of around 150 leading construction companies, found there had been growth in all three key parts of the sector – housing, commercial building and civil engineering.

The fastest increase was in civil engineering, which experienced the sharpest growth for two-and-a-half years, while new housing projects also returned to growth following a recent slump amid high interest rates.

It comes as the new government aims to encourage the building of new homes via a shake-up of the planning system.

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Peter Arnold, EY UK’s chief economist, said: “As with the manufacturing and services surveys, the 2024 General Election appears to have injected some month-to-month volatility into the construction survey results, with a soft June followed by a stronger July as uncertainty cleared.

“The detail of July’s survey was also positive, with new orders growing at the strongest pace in more than two years, and hiring and purchasing activity also increasing.

“After a challenging couple of years, the construction sector appears to be in the early stages of a strong recovery.”

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Paul Sloman from PwC described the survey’s findings as “a signal of recovery, market confidence and growth for the sector”.

He added: “The sector’s challenges in skills shortages, training and recruitment are well-documented, so it is encouraging to see employment growing at its fastest pace in a year, owing to the continued agility and adaptability of construction businesses.”

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