Great news for commercial construction output

Commercial construction output increased at its fastest rate since August 2007 according to figures from the latest Markit/CIPS UK Construction Purchasing Managers’ Index. The index also shows that the UK’s construction industry is in its eighth consecutive month of growth. This seems to be proof that the recovery of the construction industry is being sustained and that it is 'well placed' for 2014.

UK construction PMI was 62.1 in December – well above the score of  50 which separates growth from contraction. Although it was slightly down from the 62.6 seen in November, it was encouragingly ahead of expectation for the traditionally quiet December and is the eighth month running it has been above the 50 mark.

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There were “strong output rises” in all three main areas of construction activity - residential, commercial and civil engineering. The major boost in December was due to new commercial building projects and it is biggest growth in this area since before the financial crisis.

Housebuilding remained the fastest growing area of the sector. The construction survey suggested growth in December was broad-based and civil engineering also expanded.

Markit senior economist Tim Moore says: “The latest survey highlights that construction companies enter 2014 with the wind in their sails.

“Most encouragingly, the improving UK economic outlook is helping boost private sector spending patterns, meaning that the construction recovery has started to broaden out from housing demand and infrastructure projects to include strong growth in commercial building work.”

"Over half of all survey respondents anticipate increased output levels during the course of 2014, which is up sharply from one-in-three construction firms that expected growth at the same time one year ago."

IHS Global Insight chief UK and European economist Howard Archer points out that December PMI “almost matched” the 75-month high seen in November, suggesting the sector is “well placed going into 2014”.

“Evidence that the construction sector is sustaining its recent markedly improved performance is obviously good news for overall growth prospects, although it needs to be remembered that the sector only accounts for 6.3 per cent of national output”


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