Construction buyers report steep upturn

Construction activity grew at its fastest rate for six years in August and for the fourth consecutive month, according to the latest Markit/CIPS survey of construction buyers.

The index hit 59.1 in August, up from 57 in July and above the neutral 50 value, which separates expansion from contraction. The rise in activity was the fastest since September 2007.

Construction companies remain confident about the year ahead, with around 46% of survey respondents expecting a rise in activity and only 10% a reduction.

All three sectors monitored by Markit/CIPS grew.

Residential construction remained the strongest performing sub-sector, with output rising at the fastest pace since June 2010.

August data also highlighted a steep acceleration in the rate of civil engineering activity growth to its strongest since September 2007.

Commercial construction activity also increased at the most marked pace since May 2012.

Tim Moore, senior economist at Markit, said: “The latest Construction PMI figures are yet another indication that the UK economy has performed impressively over the summer months.

“A steep upturn in civil engineering activity suggested that public sector demand has joined residential building as a key driver of construction output growth during August.”

August data also signalled incoming new work increased sharply and at its fastest rate since March 2012.

UK construction companies widely reported the latest upturn in business activity was supported by a strong improvement in spending among clients, Markit/CIPS said, with anecdotal evidence from survey respondents generally citing higher levels of housing-related demand and greater levels of public sector infrastructure spending.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “A new dawn is breaking in construction. The industry recorded the fastest pace of growth since 2007 in August, leaving the dark days of recession behind.

“Builders have seen a step change in recent months and are now starting to show their true potential to the UK economy.”

Simon Rawlinson, head of strategic research and insight, EC Harris said the survey showed the construction recovery was “gathering pace”. “Continuing positive news from the housing sector was to be expected, but it is the stronger figures from the commercial sector are the most encouraging aspect of the month’s data reading,” he said.

“This is the best data since summer 2012 - so doesn’t represent a massive step change, but given the decline in activity in the commercial sector over the past 12 months, any signs of positive momentum is good news”