Wednesday 2 November 2016 9:32 am

The UK construction sector looked stronger in October

Output in the UK's construction sector rose in October, thanks to another "solid" increase in the residential building sector.

The Markit/CIPS purchasing managers' index for the construction sector rose to 52.6, up from 52.3 in September. Any figure above 50 denotes growth.

The rise was driven by activity in the housing market, but the figures suggested the commercial construction sector was fairly flat, while civil engineering activity decreased slightly. 

Meanwhile, new business growth was moderate – and "much weaker" than in the first quarter of 2016.

Read more: No Brexit blues for upbeat housebuilders

But the figures also showed the Brexit vote is having a less-than-encouraging effect on construction firms, with uncertainty acting as a brake on client confidence and putting off spending decisions.

“The UK construction sector has started the fourth quarter in a positive fashion, with the latest survey data revealing a moderate rebound from the downturn seen during the summer," said Tim Moore, senior economist at IHS Markit. 

“Subdued new order intakes contributed to a fall in construction sector business confidence for the first time since July. At the same time, a sharp pace of input price inflation added to construction firms’ anxieties about the year-ahead business outlook, with higher costs overwhelmingly linked to supplier price hikes in response to the weak pound.”

"It would be premature to conclude that the sector is back on a recovery path," added Samuel Tombs, chief UK economist at Pantheon Macroeconomics.  

"In theory, activity should increase when the construction PMI exceeds 50, but in practice, 55 has separated expansion and contraction. In addition, the sector’s stabilisation solely reflects increases in housebuilding."

However, results from housebuilder Persimmon this morning suggested things are definitely looking up – for now, anyway…