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Rebound in construction output continues into June

A further rebound in construction sector output growth was recorded in June following the 22-month low recorded in April, new data has revealed.
The headline seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) rose from 55.9 in May to 58.1 in June. The latest reading was well above the long-run survey average (54.6) and pointed to the fastest increase in overall construction activity since February.

Residential activity remained the fastest growing area of construction output in June, but the acceleration in the headline index since May was driven by a sharp upturn in both commercial and civil engineering activity growth over the month.

Survey respondents suggested that improving client demand and strong order books continued to support output growth in June.

Looking ahead, just under two-thirds of the survey panel (62%) forecast a rise in output over the next 12 months, while only 4% expect a decline.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI®, said:

“UK construction companies experienced a growth rebound and surge in business confidence at the end of the second quarter. Survey respondents cited robust inflows of new work in June, adding to already strong order books across the sector.

“Extra workloads and positivity regarding the year-ahead outlook meant that job creation accelerated to its strongest so far in 2015.

“The extent of the recent rise in construction optimism is partly down to relief that pre-election uncertainty has now passed, but it also suggests that firms are infused with confidence that underlying demand will continue to recover.

“Scorching hot demand for some construction products placed additional pressure on supply chains in June, with delivery times lengthening again for a wide range of materials. Meanwhile, another substantial rise in sub-contractor charges highlighted that persistent skill shortages in the construction sector are contributing to sharp rises in labour costs in some areas.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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