Construction buyers report sharpest rise since 2007

Grant Prior 8 years ago
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Output continued to accelerate rapidly in January with construction buyers reporting the sharpest rise since August 2007.

The latest Markit/CIPS UK Construction Purchasing Managers’ Index hit 64.6 in January, up from 62.1 in December and above the neutral 50.0 value for the ninth successive month.

Housing activity rose at its fastest rate for ten years while commercial building and civil engineering both enjoyed significant increases.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “The construction industry has started 2014 in formidable fashion, enjoying its strongest growth in six-and-a-half years reinforced by a sharp rise in new business orders.

“Housing activity growth was the highest in a decade and remains the fastest improving area of construction.

“This was supported by a solid expansion in civil engineering and commercial activity, confirming a distinctly positive picture across the board.

“Backed by positive domestic market conditions, the growth in new work is continuing to drive employment upwards, and has now been increasing for eight consecutive months.

“It is also pleasing to see that this is resulting in growing business confidence, with firms expecting to see more activity in the next few months.

“The one area which is beginning to be a concern is the ongoing pressure on suppliers to meet the rush in demand.

“As the industry’s lifeblood, suppliers are still recovering from the recession, and until they get back to full capacity, the continued lengthening of delivery times may become a restraining force on the sector in the coming months.”

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: “January’s survey provides reassurance that the UK construction recovery remains on track.

“The latest data show positive developments on a number of fronts, with job creation rebounding at the start of the year while output and new business growth was the fastest since the summer of 2007.

“Housing activity growth now stands at its strongest for just over a decade, boosted by growing demand for new homes and improving confidence within the UK property market. Meanwhile, strengthening domestic economic conditions spurred greater spending on commercial projects in January.

“A sharp rise in civil engineering activity completed an impressive showing from all three sub-categories of construction monitored by the survey.

“While input cost inflation eased in January, there were again signs that some suppliers are struggling to adjust to greater demand for construction materials.

“Vendor lead-times were lengthening even before the surge in construction output began last year, and now firms are reporting that cutbacks to capacity have caused supply bottlenecks as demand picks up across the sector.”

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