Construction buyers hail “new dawn” for industry

Grant Prior 11 years ago
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Construction buyers have reported growing workloads for the second month running as housing continues to drive the fledgling recovery.

The latest Markit/CIPS UK Construction Purchasing Managers’ Index  for June rose to 51 from 50.8 in May.

Any number above 50 represents a rise in the market and June’s figure is the strongest reading since May 2012.

The news will be a major boost for the Government on the day it launched its new industrial strategy for construction growth.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “A new dawn is emerging in the construction industry, with confidence of a sustained recovery beginning to build thanks to two months of consecutive output growth and the pace of new orders expansion hitting a 13 month high.

“Housing is the leading light sustaining last month’s performance, meanwhile commercial and civil engineering activity stabilised, arresting months of decline giving further cause for optimism.

“The strongest growth in new business orders for over a year is also driving employment upwards, resulting in confidence hitting its highest level since April 2012.

“This enthusiasm may also have been bolstered by the Government’s support for new house building. Whether expectations match reality, only time will tell.

“Suppliers still bear the scars of the recession, reflected in a lack of stock and limited capacity. Coupled with higher average cost burdens, this is placing pressure on supply chains and cost margins. This needs to be rectified, if the sector is to build on this momentum.”

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: “June’s construction data is one of the final pieces in the puzzle when it comes to survey evidence for second quarter UK economic performance, and the sector’s upturn adds to the upbeat news flow ahead of Mark Carney’s first policy meeting at the Bank of England later this week.

“The improvement in overall construction output simultaneously raises chances of strong second quarter UK GDP growth, and reduces the likelihood of imminent additional policy stimulus from the Bank of England.

“Although the construction sector faces a long and fragile road to recovery, June’s survey highlights a nascent turnaround in optimism about future output levels in the sector.

“House building remains the mainstay of growth, helped by government incentive schemes, while it was also encouraging to see civil engineering and commercial building stabilise after protracted declines in 2013 so far.”

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