UK Construction Activity Hits 13 Month High

Posted on 5 July, 2013 by Neil Bird

Construction activity increased for the second consecutive month during June as new order growth hit a 13 month high. The Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) rose from 50.8 in May to 51.0, the strongest reading since May 2012.

The rise was largely driven by house-building, which enjoyed its fifth consecutive month of growth, but the Index also shows that civil engineering and commercial property construction stabilised during June ending the period of decline experienced earlier in the year.

As a result of the levels of incoming work, construction firms are increasingly confident about the outlook for the second half of the year. The data shows that 41 per cent expect a rise in activity as opposed to just 10 per cent who anticipate a fall. This level of confidence in the industry is the highest recorded since April 2012.

This is good news for employment in the construction sector which rose for the first time since February. While the rise was only a moderate one, it is significant in that it was the largest since last September in an industry that is considered a bellwether of the wider economy.

Markit economist Tim Moore says the results paint an upbeat picture of second quarter economic performance ahead of new governor Mark Carney’s first Bank of England policy meeting.

“Although the construction sector faces a long and fragile road to recovery, June’s survey highlights a nascent turnaround in optimism about future output levels in the sector.

“House building remains the mainstay of growth, helped by government incentive schemes, while it was also encouraging to see civil engineering and commercial building stabilise after protracted declines in 2013 so far,” he said.

Mr Moore believes the results raise the prospects of continued growth and lessen the likelihood of the Bank of England introducing further stimulus measures.

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