Construction activity booms but unemployment still rising

THERE was some good news for the UK construction sector yesterday after the Markit/CIPS purchasing managers’ index showed that activity expanded for the second successive month.

The leading indicator showed a sharp jump to 58.2 in April from 53.1 the previous month, well above the 50 level that separates growth from contraction. The expansion was supported by a further rise in incoming new business. New order volumes increased at the fastest rate since October 2007, with increased tender wins and improved client confidence driving growth.

The sector still suffered job losses but encouragingly, these were at the slowest pace for 20 months. Construction firms are also more positive about the future. Sarah Ledger, economist at Markit, said: “Optimism over future business prospects continued to improve, despite sustained concerns over potential cuts in government spending. This suggests that growth in private business may help offset any impending weaknesses in public sector demand.”

IHS Global Insight’s Howard Archer said: “The sector still faces a very challenging environment and it is likely to be hit significantly by the next government’s need to rein in its spending for an extended period.”