Rise in new orders lifts construction activity to 21-month high

3 April 2012

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3 April 2012 | Adam Leach

The UK construction sector experienced growth for the second consecutive month in March as new business and increased activity boosted employment.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) for March recorded figure of 56.7 for the month indicating a marked improvement in the sector from February, which scored 54.3. It is the sharpest expansion in 21 months.

While the commercial sub-sector was once again the strongest performer, both housing and civil engineering also reported growth - although the increase in housing was slight.

The increase in new orders, which have been rising steadily for the past six months, was the largest since September 2007 with increased tender opportunities and the completion of long-running negotiations highlighted as contributing factors. The PMI also revealed a slight increase in employment and a growth in the use of sub-contractors.

But the positives were tempered by the fact input prices in the sector continued to increase. The rise in raw material costs was attributed due to rising oil prices.

Chris Williamson, chief economist at Markit, said: “The good weather appears to have led to a surge in demand for construction projects in March, adding to the recent flow of good news which suggests the economy will have skirted a recession. The particularly encouraging news is that the improvement in confidence is generating more jobs, with employment rising modestly.”

David Noble, CEO at CIPS, said: “Driven by stronger growth in activity in the commercial and civil engineering sectors and positive sounds from customers at the end of what has been a much brighter first quarter for construction, the modest rise in employment shows that companies are now starting to develop an appetite for expansion.”

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