Sharpest rise in construction output since August 2007

Markit/CIPS UK Construction PMI report reveals strongest growth in last six-and-a-half years

JANUARY data indicate that UK construction companies started 2014 with an acceleration of output growth, boosted by sharp rises in incoming new work. Stronger demand is also resulting in a marked increase in employment numbers across the construction sector as well as improved confidence about the business outlook for the next 12 months.

Adjusted for seasonal factors, the Markit/CIPS UK Construction Purchasing Managers’ Index registered 64.6 in January, up from 62.1 in December and above the neutral 50.0 value for the ninth successive month.

Moreover, the latest index reading points to the sharpest overall expansion of UK construction activity since August 2007.

Output growth at the start of 2014 reflected rising levels of activity across all three broad areas of construction monitored by the survey. Residential construction remained the best-performing sub-category, with the latest expansion of housing activity the steepest since November 2003.

Meanwhile, commercial building work and civil engineering activity both increased sharply during January, and in each case the latest expansion was the steepest since the summer of 2007.

Commenting on the report, David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply (CIPS), said: ‘The construction industry has started 2014 in formidable fashion, enjoying its strongest growth in six-and-a-half years, reinforced by a sharp rise in new business orders.

‘Housing activity growth was the highest in a decade and remains the fastest improving area of construction. This was supported by a solid expansion in civil engineering and commercial activity, confirming a distinctly positive picture across the board.’

However, Mr Noble warned that ongoing pressure on suppliers to meet the rush in demand was beginning to cause concern. ‘Suppliers are still recovering from the recession, and until they get back to full capacity, the continued lengthening of delivery times may become a restraining force on the sector in the coming months,’ he said.