Sharp increase in UK construction activity

1 August 2013

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2 August 2013 | Adam Leach

Activity in the UK construction sector expanded at its fastest rate since June 2010 last month as new business, activity and employment all increased. 

The Markit/CIPS UK Construction Purchasing Managers’ Index recorded a growth figure of 57 for July – where a figure of 50 would indicate no change - indicating a sharp rise from the previous month’s figure of 51. The marked improvement came as new business rolled in for UK builders and demand picked up in the country’s housing sector.

The growth in incoming work helped bolster respondents’ confidence in the future as the sector’s outlook on the next 12 months reached its most optimistic reading since May 2010. Both the rise in output and the brighter outlook supported a concerted effort to boost numbers as employment rose for the second straight month at a pace not seen since December 2011. The sharp rise in purchasing saw lead times lengthen to a seven-year high. 

Tim Moore, senior economist at Markit, said: “Construction firms saw the fastest improvement in new orders for over a year, which helped kick-start job creation and input buying growth during July. A switch to sharply rising purchasing activity may have caught some suppliers by surprise, as delivery times lengthened to the greatest degree in over seven years.”

David Noble, CEO at CIPS, said: “Homes are the beating heart of this rapid recovery in the construction sector, backed by a solid expansion in civil engineering and commercial activity. Better economic conditions, a jump in new business activity and the strongest level of confidence since the era of austerity began in 2010, strongly suggest this growth can be sustained into Q3.”

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