Sharp rise in New Year activity

The New Year has got off to a good start for the construction industry with a sharp rise in activity and new order growth according to the Chartered Institute of Purchasing and Supply.

Total construction activity in January rose to 57.9 from 57.5 the previous month and also grew at a faster rate. CIPS said the increase was a reflection of the increase in commercial work over the month.

Volumes of new work placed with UK constructors increased in January at the strongest rate in three months, as the seasonally adjusted New Orders Index rose to 56.5. This was principally driven new contracts from local authorities and the energy and water sectors.

Finally, confidence amongst UK constructors increased in January to its highest level in eleven months. Planned company expansion, expectations of increased site capacities and hopes of firm market demand were all cited as reasons for optimism.

Roy Ayliffe, director of professional practice at the CIPS said: “2007 has got off to a good start for the UK construction sector, as new contract wins spurred a solid rate of growth in purchasing activity last month. However, panellists are continuing to face rising inflation costs and increase in the prices of essential raw materials such as concrete and metals.

“On a more upbeat note, the buoyancy we saw at the end of 2006 remains positive with purchasing managers reporting their highest levels of confidence in almost a year. Expectation of increased site capacities and strong demand from the marketplace are the main drivers behind the rising confidence.”