'New dawn breaking in construction' as growth accelerates at fastest pace since 2007

Activity across Britain's building sites grew at its fastest pace for nearly six years last month amid a "new dawn" for the hard-hit construction industry.

The Markit/CIPS purchasing managers’ index jumped to 59.1 in August from 57 the previous month. Any reading above 50 signals growth, and the index is now at its highest level since September 2007.

City analysts, who had anticipated a small decline in the index, said the strong reading bolstered the sense of an accelerating economic recovery.

“A new dawn is breaking in construction” said David Noble of CIPS. “Builders have seen a step change in recent months, and are now starting to show their true potential to the UK economy”.

The rise in construction activity last month was powered by the residential sector but civil engineering and commercial projects also contributed.

Official figures show that construction expanded by 1.4 per cent in the three months to June. The sector, which accounts for about 6 per cent of the economy, plummeted in the 2008-09 downturn as investor confidence evaporated and projects were shelved. It remains some 16 per centbelow its peak in 2008 according to the most recent figures.

The Markit/CIPS snapshot of manufacturing yesterday showed firms’ order books were at their strongest in 20 years in August.

Tomorrow sees the release of the latest snapshot of the services sector, which accounts for three quarters of the UK’s output.