Construction output growth at four-month high

Faster expansions of housing and commercial building activity have led to a strong rebound in growth momentum across the UK construction industry.

Construction output growth at four-month high

At 62.6 in June, the seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) picked up from a seven-month low of 60.0 in May. The headline index has now posted above the 50.0 no-change threshold for 14 months running and the latest reading signals the strongest pace of overall output growth since February.

Residential construction remained the best performing area of activity during June, while commercial building activity also increased at the most marked pace for five months.

Demand for new construction projects has also seen a rapid increase in staffing levels, with the rate of job creation accelerating to its sharpest since the survey began over 17 years ago.

Civil engineering was the only area of activity to record a moderation in growth, with the latest expansion the least marked since September 2013.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: “UK construction companies started the summer with another surge in house building and commercial activity, which helped to offset a slight moderation in civil engineering growth as temporary projects related to flood relief came to completion.

“The latest survey suggests that the UK construction sector has expanded by more than 1% over the second quarter of 2014, driven by improvements in the underlying health of the UK economy, favourable funding conditions and robust increases in new housing starts.

“A key recent development across the construction sector has been the return to pre-recession rates of job creation, following a prolonged period of falling payroll numbers and cuts to operating capacity.

“Moreover, the latest rise in construction employment was the fast since the survey began in 1997, which represents a remarkable yardstick of progress as the sector looks to recover the ground lost over the past seven years.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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