Member Article

UK construction output growth fastest since August 2007

The UK economy is showing further signs of recovery with the news that construction output is at its highest level for six years.

The Markit purchasing managers’ index (PMI) for the sector rose to 62.6 last month, up from 59.4 in October.

House builders were at the forefront of the sector’s resurgence as they saw activity grow at the fastest pace for a decade last month.

A lot of this resurgence is attributed to the Bank of England’s schemes to boost mortgage lending. Domestic building activity is at its fastest in 10 years, growing 1.7% in the third quarter compared to the previous quarter.

Tim Moore, senior economist with Markit, said: “Construction activity continues to spring back to life during the final months of 2013.”

However, he said the pickup was being built on a low base, after years of shrinkage or tepid growth resulting from the credit crisis that was sparked in 2007.

The UK economy grew by 0.8% in the third quarter, as Britain’s economy returns to growth not seen since before the financial crisis.

An industry report revealed yesterday also gave a buoyant forecast for UK manufacturing, predicting 2.7% growth, compared to 2.4% for the economy as a whole.

The chancellor George Osborne is due to deliver his update on the government’s economic plans in his Autumn Statement on Thursday.

Prime minister David Cameron acknowledged the good news regarding the construction sector on Twitter today, but said “there is much more to do. It is vital we stick to the plan”.

David Tinsley, UK economist at BNP Paribas, said the findings suggested the UK could soon recover the ground lost during the crisis: “These survey indicators are suggesting something like a 1% rise in GDP in Q4.

“If this sort of pace can be continued into 2014, then the level of UK output will have risen above its pre-crisis peak by next summer.”

Commenting on the Markit report, David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “House building lived up to its new-found status as star performer in November with the steepest growth rates in 10 years, with commercial and civil engineering activity holding their ground too.

“Inevitably, business confidence continued to rise sharply, helping to boost spending across the industry heading into the festive season. Supported by favourable market conditions, new orders increased at the joint-fastest pace since September 2007. This in turn contributed to a significant increase in workforce numbers, pointing to continued optimism and rising expectations for the future.

The higher the Markit reading above 50, the stronger the growth in activity.

This was posted in Bdaily's Members' News section by Graham Vincent .