Construction swings back to growth

UK construction buyers have reported a continuing rebound in activity in July, the latest Markit/CIPS survey has found.

The index hit 57 in July, up sharply from 51 in June, and significantly over the 50 barrier that separates growth from contraction. This was the fastest rate of growth since June 2010.

Markit/CIPS said the survey “pointed to a robust and accelerated expansion of overall business activity in the construction sector”.

The survey found higher levels of business activity were recorded across all main areas of construction, with residential building activity the strongest performing category, with output growth surging to its steepest since June 2010. Growth in housing activity has now been recorded for six months running.

Other key findings of the survey included:

• Civil engineering activity returned to expansion in July
• Commercial construction output rose at the most marked pace since May 2012
• The increased volumes of new work also contributed to a further upturn in construction firms’ confidence in the year ahead, with the degree of positive sentiment reaching its strongest since May 2010.

Tim Moore, senior economist at Markit said: “July’s survey highlights a new wave of optimism across the UK construction sector, with companies reporting a pace of expansion in excess of anything seen over the past three years.

“The swing back to output growth broadened to include commercial and civil engineering activity during July, although housing construction remains the one thing crucial to the sector’s strong upturn at present.

“Construction firms saw the fastest improvement in new orders for over a year, which helped kick-start job creation and input buying growth during July. A switch to sharply rising purchasing activity may have caught some suppliers by surprise, as delivery times lengthened to the greatest degree in over seven years.”