Construction output hits highest level in seven months

Construction output in September was at its highest level in seven months, according to the latest Markit/CIPS survey.

The industry barometer found growth in output in the UK construction sector was led by the fastest rise in residential building in 12 months.

The seasonally adjusted output index registered 59.9 in September, up from 57.3 the previous month and well above the neutral 50.0 threshold which separates expansion from contraction.

The latest reading was also well above the long-run survey average (54.7) and pointed to the fastest increase in construction output levels since February.

Housebuilding remained the best performing broad category of construction activity in September.

The latest expansion of residential building was the strongest for 12 months, which some survey respondents attributed to the launch of development projects that had been delayed earlier in 2015.

Commercial construction activity also rose sharply in September, with the pace of growth accelerating to a seven-month high.

Meanwhile, civil engineering activity increased for the fifth consecutive month and the rate of expansion picked up to its fastest since February.

Commenting on the Markit/CIPS UK Construction PMI, Stefan Friendhoff, Global Corporates managing director for construction at Lloyds Bank Commercial Banking, said: “There remains variation across the sector as a whole.

“Residential is still blazing a trail, evidenced by the presence of four housebuilders in the current FTSE 100, while commercial and civil engineering are slightly less buoyant.

“The firms coping best in this consistently challenging environment are those which continue to diversify away from core UK project work, for example by developing their support services divisions or securing work in overseas markets.”