UK construction sector growing at its fastest pace in six years
Tuesday 03 December 2013
Britain's construction sector expanded at its fastest pace in six years in November, hitting its highest levels of output and employment since August 2007, according to newly released data.
The Markit/Cips Purchasing Managers’ Index of activity in November leapt to 62.6, up from 59.4 in October, registering the strongest reading since August 2007. Any reading above 50 indicates expansion.
The month’s growth, which was well above City forecasts, was supported by rising activity in commercial construction and civil engineering but the largest contribution came from residential building, as government support for the housing market kicked in.
“The construction sector does now seem to be enjoying decent, and increasingly broad-based, recovery after extended, deep weakness,” Howard Archer of IHS Global Insight said. He added that the sector, which accounts for 6.3% of the economy, would likely contribute to another strong GDP growth figure for the final quarter of the year.
The survey also showed strong expectations from building firms of future growth — the proportion of businesses anticipating a rise in output in the year ahead reached its highest level since 2009. For the sixth successive month the sector created additional jobs.
However, data from the Office for National Statistics show that at the end of September the output of the construction sector was still 13% below its peak in the first quarter of 2008. “Construction growth is still coming from a low base as output levels rebound from a deep and protracted double-dip recession that only really ended this summer,” Tim Moore of Markit said. “Although construction’s present growth trajectory may be the steepest for more than six years, there is a huge loss of output to recoup.”
The building sector grew by 1.7% quarter on quarter in the three months to September according to the ONS, with analysts identifying a boost to sentiment from the Government’s Help to Buy equity subsidies for first-time buyers.
The construction survey comes in the wake of yesterday’s snapshot of manufacturers which showed last month’s growth was the strongest in more than two and a half years. Tomorrow sees the publication of the survey of activity for the UK’s service sector, which accounts for three quarters of the economy.
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