Construction sector starting to recover, survey finds

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26th September 2016 13:32 - Construction

Construction sector starting to recover, survey finds: According to the closely scrutinised Markit/CIPS construction purchasing managers’ index (PMI), Britain’s construction industry has been showing signs of recovery during the last month, with outputs beating expectations and raising from July’s seven year low.Construction sector starting to recover, survey finds

The index hit 49.2 in August; an increase on July’s 45.9 and higher than economist’s predictions of 46.5. The shift comes after a surprising increase in manufacturing output in August 2016, which equated to the highest monthly rise in 25 years.

However, in July the index recorded construction activity as the quickest decline since July 2009, which was attributed to the uncertainty following Britain’s vote to leave the European Union which ultimately resulted in a sharp decline in commercial building activity.

This August, business activity only saw a slight decrease, as new order volumes started to move towards stabilisation.

The Markit/CIPS report claimed that in August, the rate of construction housing and commercial building was the slowest it had recorded in three months, whereas civil engineering was seen to plateau after a decrease in July.

With a recovery for the construction industry in sight, staffing levels recorded a marginal increase in August and the utilisation of contractors continued to fall.

However, with the sterling falling to the lowest it had been in 31 years, in the wake of the infamous Brexit, the costs for construction firms increased, with input cost inflation growing for the third consecutive month to hit the highest level in five years.

The index also noted that business confidence also improved from a 39–month low in July; however, it was still close to the lowest level on record since 2013.

According to the Office for National Statistics (ONS), construction output declined by 0.7 per cent in the second quarter of 2016, following a 0.3 per cent decrease in the first quarter, resulting in two consecutive quarters of negative growth since 2012.

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