Construction activity rises as job losses stop

Grant Prior 13 years ago
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Construction activity increased more than expected in May as an upbeat set of figures from purchasing professionals surprised city experts.

May data signalled a solid expansion of activity in the UK construction sector as the Markit/CIPS Construction Purchasing Managers’ Index rose to 54.0, from 53.3 in April. Anything above 50 represents growth.

Employment levels also rose halting a ten month run of job cuts across construction.

The survey said a further rise in new business and the release of previously moth-balled projects supported the latest expansion in UK construction activity.

Business prospects are also expected to improve with the degree of positive sentiment improving to a one-year high.

Sarah Ledger, Economist at Markit and author of the UK Construction PMI said: “New order growth was marked, suggesting that increasing levels of output will be sustained.

“A look at the sub-sectors monitored shows a mixed picture, with levels of civil engineering activity down markedly, but a return to growth for housing.

“Commercial output growth was broadly consistent month-on-month, with the average for the quarter so far outpacing that of Q1.

“Positive sentiment regarding future business activity rose to a one-year high, although concerns over public sector spending cuts continue to weigh on confidence.”

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “The millstone of public spending cuts can be seen clearly in this month’s construction PMI, but aside from the unsurprising decline in civil engineering activity, the overall figures are not quite so foreboding.

“Sustained growth of commercial activity and reports of an unblocking of order books is much needed good news. It remains to be seen whether a marked expansion of commercial projects will help to replace what has been lost elsewhere in the coming months, but it has contributed to a small improvement in confidence.

“This is further reflected by the fifth month of rising purchasing activity, and the first – albeit modest – growth in employment for eleven months.

“It’s encouraging to see a return to growth in the housing sector after April’s blip but there may be a long way to go before underlying demand for new properties, whether purchase or rental, takes the edge off market volatility.”

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