Rapid boost for UK builders as sector heats up

UK CONSTRUCTION firms have continued their upward climb during October, posting the strongest one-month improvement to activity since before the financial crisis.

According to Markit’s purchasing managers’ index (PMI) for the sector, construction is expanding at the fastest rate since September 2007. The headline figure of the index is 59.4, well above the neutral 50 mark.

The sector, which suffered from a protracted downturn even in the years after the crash, now appears to be recovering, with October marking the sixth month of growth in a row.

The surge in recent activity has prompted confidence among purchasing managers: 52 per cent now expect output to rise over the year ahead, while only 12 per cent expect it to fall.

The more buoyant business activity is spread across the sector, with civil engineering, commercial activity and housing all showing robust performances.

IHS Global Insight’s Howard Archer referred to “a sustainable, robust upturn” for builders, adding: “What is particularly encouraging and bodes well for the sustainability of the upturn is that the improvement in construction activity is now widespread across sectors while incoming new business is elevated.”

The recent upturn of the British economy appears to be translating into an increase in jobs: the employment portion of the index also posted the steepest increase since 2007.

However, recent surveys by the Royal Institution of Chartered Surveyors (RICS) pointed to shortages emerging in construction. Despite the fact that building activity is still down on its pre-crash levels, companies are already reporting shortages in both skilled labour and in necessary materials.

Barclays’ Simon Hayes added: “Input prices have accelerated sharply in recent month, with the associated index up at 67.2 in October, a rise of nearly 14 points in the last six months.”