Sharpest construction output growth for eight months

posted by Kathryn Manning
2 October 2014

The UK construction sector enjoyed its best quarter for 17 years in September, supported by steep rises in housing, commercial and civil engineering activity.

However, while the overall performance of the construction sector was close to its strongest since the summer of 2007, latest data indicated that new order growth and job creation both eased to their lowest for four months. Supply chain pressures also resulted in a further steep increase in input costs as well as further delays in the receipt of construction materials. 

The Markit/CIPS UK Construction Purchasing Managers’ Index (PMI), adjusted for seasonal influences, posted 64.2 in September, above the 50 baseline indicating growth and up fractionally from 64.0 in August.

Housing activity remained the fastest growing area of construction output in September, but the rate of expansion eased to its lowest since May.

Commenting on the report, David Noble, Group CEO, CIPS, said: “The construction industry’s strong performance continued unabated in September, sending out a reassuring message about the underlying health of the UK economy. As a sector, construction is sensitive to changes in economic fortune, so the fact that we are witnessing sustained growth bodes well as we enter the final quarter of 2014.” He said that while domestic housing eased slightly in September, the growth in commercial and civil engineering activities accelerated notably. “It could be most telling, as it represents businesses’ willingness to invest; they are putting their money where their mouth is,” he said.

Chris Williamson, chief economist at Markit, said: “After the manufacturing PMI signalled a disappointing slowing of factory growth in September, a near-record increase in activity registered by the construction PMI provides more encouraging news on the health of the UK economy at the end of the third quarter.”

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