Construction activity recovers

Activity in the construction industry grew last month at the strongest rate since September 2007 according to a new report published today.
The seasonally adjusted Markit/CIPS Construction Purchasing Managers’ Index registered 58.5, slightly up on the previous month’s 58.2, and the strongest reading since September 2007.

A rise in new orders drove the increase in activity, and also led to an increase in employment.

The strongest expansion was in house building, where growth in residential construction was the sharpest since August 2007. Commercial activity was slower than previous months, but still strong in the context of historical data. Meanwhile, civil engineering activity grew for the first time in two years. This sector was the last to return to expansion, despite having contracted at a relatively slower rate during the downturn compared to the other construction categories.

David Noble, executive officer at the Chartered Institute of Purchasing & Supply, said: “It really is a double edged sword for the UK construction sector at the moment. Purchasing managers say that on the surface things are looking positive with recent growth accelerating and more jobs on the horizon. However, the recovery is so fragile that it will be extremely vulnerable to the impending public sector cuts and it is unclear whether the recovery is robust enough to cope with such knock backs.

“Civil engineering is a clear case in point. It has only just started to grow for the first time in two years, and is an industry where public spending tends to be focused. The cuts are clearly coming and it’s not long before we will start to see them making their mark.

“What is clear is that recovery in construction is creating a ripple effect across the economy as firms supplying the industry benefit from increased purchasing activity. But ongoing inflation challenges reflect global uncertainties for certain commodities and remind us how much the sector is shaped by the global economy.”