Housebuilding boosts construction
Housebuilding surged at its fastest pace for more than a decade last month to trigger record hiring in the construction industry, a closely watched survey said today.
The home building market grew at its steepest level since November 2003, driven by strong demand for new housing projects, according to July data from the Markit/CIPS UK Construction PMI report.
Overall, the index edged down to 62.4, down from 62.6 in June, but activity remained well above the 50 level that divides growth from contraction and was above City expectations of 62.
The data showed that construction activity has grown for 15 consecutive months and that hiring in the sector grew at its fastest level since the survey began in April 1997.
Tim Moore, senior economist at Markit, said: "July's figures suggest the UK construction sector is enjoying its strongest cyclical upswing since the global financial crisis, while a new record rise in employment highlights that construction firms are increasingly confident about the sustainability of the upturn."
The report showed that civil engineering activity lifted sharply in July, while commercial construction also rose but at a slower rate than in June.
This data contradicts official Office for National Statistics figures which last month showed that construction output fell by 0.5% in the second quarter of the year.
But Mr Moore said this latest report could lead to official GDP data being revised later.
He said: "Overall the survey adds to the view that construction companies have performed impressively so far this summer, which raises the likelihood that the sands of time could wash away the construction weakness seen in the preliminary second quarter GDP release."
David Noble, chief executive of the Chartered Institute of Purchasing and Supply, warned that a shortage of raw materials and suitable subcontractors in the industry might hinder growth in the sector.
He added that bricks were especially in short supply, leading to higher prices and longer delivery times.
Mr Noble said: "Construction firms reported the sharpest deterioration in the quality of sub-contracted work since 1999, which combined with lengthening supplier delivery times could conspire to put the brakes on the sector's growth."