The UK Construction PMI is a monthly survey indicator of whether construction activity is increasing or decreasing compared with the previous month. Its headline, the Total Activity Index, is a diffusion index: above 50 signals an overall increase, below 50 signals an overall decrease, and 50 indicates no overall change. It is not a percentage growth rate or a direct estimate of the pound value of construction output.
How the UK Construction PMI is calculated
S&P Global compiles the index from questionnaire responses by a panel of around 150 construction companies. The panel is stratified by workforce size, based on contributions to GDP. Responses are collected in the second half of each month, and respondents compare activity with the previous month. Survey data were first collected in April 1997.
For each measure, responses are converted into a balance: “higher” responses count in full, “unchanged” responses count at half weight, and “lower” responses count zero. The resulting index ranges from 0 to 100. S&P Global seasonally adjusts the indices.
What readings above and below 50 mean
- Above 50: the balance of responses indicates that activity increased overall from the previous month.
- Below 50: the balance indicates that activity decreased overall.
- At 50: the index indicates no overall change.
The distance from 50 reflects the strength of the survey’s directional signal, not the percentage change in construction output. A reading of 60 does not mean output grew 10%. Likewise, if the index falls from one reading above 50 to a lower reading that remains above 50, it still signals expansion, but the balance of responses is less positive.
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What the headline measures—and what the other indices add
The headline is the Total Activity Index, which tracks changes in the total volume of construction activity compared with one month earlier. S&P Global describes it as broadly comparable in role to its Manufacturing Output Index and Services Business Activity Index, but cautions that the Construction PMI is not comparable with the headline manufacturing PMI figure.
The survey also reports indicators that can add context to the headline:
- Residential, commercial and civil-engineering activity
- New orders, employment and quantity of purchases
- Supplier delivery times and input prices
- Subcontractor use, availability, rates and quality
- Future activity
These sub-indices are survey indicators, not direct measurements of output. They can help show which types of work or business conditions are moving alongside the headline, but do not turn the headline into a measure of value or growth rate.
Why it can differ from ONS construction output
The PMI and the Office for National Statistics’ construction-output statistics measure different things. The PMI asks businesses whether performance is higher, unchanged or lower than in the preceding month. ONS construction-output statistics collect the value of work and publish current-price and chained-volume estimates. Differences in the variables and methods can therefore produce different pictures of performance.
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Use the PMI as a timely signal of reported direction and ONS estimates to assess the value of construction work within the ONS statistical framework. A PMI reading is not a growth rate, and it should not be expected to match a later ONS output estimate.
How to compare the PMI with another indicator
Before comparing two figures, check that they refer to the same kind of evidence and period. In particular, compare:
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- Measure: survey responses about direction, or a statistical estimate of work value?
- Reference period and publication timing: do the figures cover the same month, and when were they released?
- Coverage: are geography and construction-sector coverage alike?
- Adjustment: are both figures seasonally adjusted?
- Index level: are you comparing the headline with another headline, or with a sub-index?
Seasonal adjustment and revisions
S&P Global says the underlying survey data are not revised after publication. Seasonal-adjustment factors may be revised, however, which can affect seasonally adjusted historical series. When reviewing past readings, use the latest available adjusted series rather than assuming every previously published adjusted value is fixed.
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