Fresh signs of improvement in UK construction

THE CONSTRUCTION industry continues to grow, according to Markit’s purchasing managers’ index (PMI) for the sector, which reported a second consecutive month of rising activity.

The PMI figure for building was released yesterday and stood at 51, an improvement on last month’s reading of 50.8. Any number over 50 indicates increasing activity in the market. The index has not registered a positive reading for two months in a row since the middle of last year.

Construction has wavered recently, with negative PMI readings for several months in late 2012 and early 2013, but now appears to be strengthening.

IHS Global Insight’s chief UK economist, Howard Archer, said: “With the purchasing managers reporting that both manufacturing and construction activity improved further in June, the prospects for second quarter GDP growth are looking ever more promising”. He added that “a decent June purchasing managers’ survey for the dominant services sector, out [today], would really help matters further”.

There were a number of positive indicators announced by Markit, as residential building activity rose for a fifth consecutive month, and rising new orders indicated strong output for the months ahead.

And 41 per cent of construction companies now expect rising activity in the market over the next twelve months, while only 10 per cent expect to see a decline.

All UK PMI figures, for services, manufacturing and construction, are currently positive, suggesting a strong showing for economic growth in the second quarter.

If chancellor George Osborne increases demand for housing with his help to buy scheme, it is hoped that developers will be encouraged to increase building, which would provide further help to construction.