A rise in activity during February follows on from growth in January, according to the CIPS/Markit survey

February’s Markit/CIPS Construction PMI report points to an increase in activity in the UK construction sector, continuing the strong start to 2011.

The seasonally adjusted figures came in at 56.5 for February, up from 53.7 in January and an eight-month high. A figure above 50 represents growth, while anything below 50 represents a decline.

In a positive sign for the industry, the report said: “Panellists commented that opportunities to tender had increased, with some companies also noting that decisions had been made on previously quoted work.

“UK construction companies were optimistic in February that activity would increase over the coming year, as overall economic conditions continue to improve and customer confidence increases.”

Economist at Markit and author of the UK Construction PMI report, Sarah Ledger, said: “February’s survey showed continued recovery in the UK construction sector following December’s weather-related decline in activity, with output rising at the fastest rate in eight months on the back of strengthening growth of new business.

“The latest figures therefore suggest that, having contracted by -2.5% in the final quarter of last year, the ONS measure of construction output should bounce-back into positive territory in Q1.

“Demand and supply side pressures continue to push up purchase prices, with construction costs rising at the fastest rate since August 2008 and delivery delays the worst for over three years. Concerns about rising costs and fears over cuts in public spending meant future business optimism remained subdued and well below the long-run average.”

While the report continues the positive sentiment experienced in January, other market watchers are cautious about the construction sector’s immediate prospects.

Firm such as Carillion, Kier and housebuilders Persimmon and Barratt have all said that 2011 will be a tough year and that growth will be hard to come by in the face of government spending cuts, which have yet to fully kick in.

 

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