UK Construction Industry Posts Strong Growth Across the Board

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11th September 2014 10:42 - Construction

The UK construction industry sustained strong growth in all three categories last month (August), according to Markit/CIPS UK Construction Purchasing Managers’ Index (PMI).

Overall, the industry’s PMI stood at 64.0 in August - up by 1.6 on the previous month’s figure (62.4) and the fastest overall increase in output levels since January. August’s strong PMI also represented the second strongest rate of output expansion since the industry’s pre-recession peak in August 2007.

The construction industry has now boasted a PMI well above 50.0 (which signals no change) for several consecutive months.

Despite its expansion levelling off to a three-month low, residential construction posted the fastest rise in activity, ahead of civil engineering and commercial construction.

Civil engineering activity increased at the strongest pace since March, whilst the growth of commercial construction was also close to its fastest since the summer of 2007.

Elevated levels of incoming new work in August extended the industry’s current period of continuous new business growth to 16 months - many put this down to improved economic conditions and a corresponding rise in clients’ willingness to commit to new construction projects. As a result, almost three fifths (59%) of UK construction firms predict a rise in business activity over the forthcoming year, with just 7% anticipating a decline.

In July, the survey reported record levels of job creation, and August’s strong reading was only slightly lower than this.

Furthermore, sub-contractor usage picked up sharply and at the fastest rate since the survey began in April, 1997. This, in turn, contributed to a survey-record drop in sub-contractor availability and a much steeper increase in rates charged by sub- contractors.

David Noble, Group Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said:  “The resurgence in construction has entrenched itself after a summer of blistering growth but builders should prepare for growing pains this autumn as the sector labours to recover lost capacity. Buoyed particularly by investment into civil works, construction output grew at the fastest pace for seven months in August, whilst activity continued to expand in housing and commercial construction. Confidence for the next 12 months also remained high as businesses continue to invest for the future.”

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