Construction activity strengthens as housebuilding reaches new heights

0 Howard Archer: findings are ‘very welcome surprise’ Britain’s construction sector was given a “surprise” boost yesterday as it emerged that activity had risen sharply in July.

The Markit/cips UK construction purchasing managers’ index (PMI) rose to 55.8 in July, up from 53.1 the month before. It marked the sharp- est increase in overall sector activity since May 2017, and beat economists’ expectations for a reading of 52.8. Any figure above 50 denotes growth.

The solid performance was underpinned by the fastest increase in residential housebuilding since December 2015, while the survey also showed that new business growth was gaining traction.

Howard Archer, chief economic advisor to the EY Item Club think-tank, described the news as a “very welcome surprise”.

He said: “The July purchasing managers’ survey boosts hopes that the construction sector has started off the third quarter on the front foot after seeing some rebound in the second quarter. This follows a very difficult first quarter that was only partly due to the severe weather. Fuelling hopes that the construction sector can build on its recent improvement, new orders growth improved to a 14-month high in July.

“There were reports that improving client demand had led to successful negotiations on larger-scale projects. Adding to the better picture, employment growth was at a 31-month high.”

The survey also showed that commercial construction output rose at its sharpest pace in just over two-and-a-half years.

Civil engineering activity increased “only moderately” but at a faster pace than in June, though a lack of new projects such as railway infrastructure work was holding back the sub-sector.

A survey of the dominant services sector is now awaited.