House-building drives construction growth

House-building drives construction growth


A surge in house-building and a strong commercial sector has helped the construction industry to achieve its longest period of growth for more than seven years, industry data has revealed.

Figures from the latest Purchasing Managers’ Index survey carried out by Markit and the Chartered Institute of Procurement and Supply (CIPS) recorded a reading of 57.3 in August, up from 57.1 the previous month. The reading is well above the 50 score seen as a benchmark for expansion, though slightly behind economists’ estimates of 57.5.

It means that construction has recorded higher levels of business activity each month since May 2013, representing the longest period of sustained growth for seven-and-a-half years. And commentators say the positive picture looks set to help overall growth in the building sector, as well as providing a boost to the wider economy in the UK.

IHS Global Insight UK and European chief economist Howard Archer said that growth in August should lead to “decent expansion in the third quarter and is likely to make an increased contribution to gross domestic product growth”.

The survey said the sector was boosted by growth among house-builders and commercial work, although large-scale civil engineering projects were seen to dip slightly. It attributed expansion in the sector to improving economic conditions and stronger demand from private-sector clients. This contributed to an increase in the number of jobs available in the industry in August, with employment opportunities rising for the 27th month in a row.

More than half of firms – 53% – also report feeling optimistic about future growth, saying they expect activity to rise over the coming 12 months, the PMI survey found.

David Noble, chief executive of the Chartered Institute of Procurement & Supply, said: “The construction sector picked itself up a little more this month as overall activity stepped up.”

“Housing remained the strongest driver of growth in addition some reported new impetus in the commercial sector,” he said.


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