Building activity up but outlook still bleak
Construction activity in the UK grew last month, according to a closely watched survey, but experts warned the wider economy was still likely to have stagnated at the end of last year.
The Markit/CIPS purchasing managers' index survey for construction, in which a reading above 50 represents expansion, rose to 53.2 in December from 52.3 in November, boosted by new business and a rise in employment.
Civil engineering projects, such as the Crossrail scheme in London, recorded the fastest growth in the month, while housebuilding increased for the second month running. Commercial construction grew but at its slowest pace in a year.
While the whole sector has grown for 12 months in a row, economists warned it only makes up 7.6% of the total economy, and the strong performance is unlikely to have had a significant impact on gross domestic product (GDP) in the final quarter of 2011.
Howard Archer, chief UK and European economist at IHS Global Insight, said the economy's overall performance in the final quarter of last year will depend on how well the powerhouse services sector performed.
He said: "It is welcome news to see any evidence that part of the economy is growing at the moment. However, signs that construction output expanded in the fourth quarter of 2011 does not hugely dilute concern that GDP could have contracted."
New business received by UK construction companies increased for a third consecutive month in December, Markit said.
Purchasing managers' index shows a jump of this amount