UK Construction Growth Sustains Momentum

(RTTNews) - British construction sector sustained its robust growth in August, albeit at a slower pace, with continued boost from the housing sector and new impetus from the commercial sector.

The seasonally adjusted Markit/CIPS UK Construction Purchasing Managers' Index rose to 57.3 from 57.1 in July, survey results from the Chartered Institute of Procurement and Supply and Markit Economics revealed Wednesday. Economists had forecast a higher score of 57.5.

Higher levels of business activity have been recorded in each month since May 2013, which represents the longest period of sustained growth for seven-and-a-half years, the survey said. However, the index continued to signal a softer growth path than that recorded throughout 2014, the report added.

In August, construction growth continued to be driven by residential construction recorded the fastest pace of expansion among the three broad sectors.

The sector also received a boost from the fastest rise in commercial work for five months due to improving economic conditions and strong demand from private sector clients.

Meanwhile, civil engineering was the weakest performing sector with output growing at the slowest pace in three months.

The survey also showed that strains on supplier lead-times were the least marked since May 2012. New business intake grew solidly in August, though the increase was the least marked since May.

More than half of the surveyed construction firms, 53 percent, expected business activity to grow in the next 12 months, while only 5 percent predicted a reduction. The degree of optimism was below June's 11-year high, yet it was above the long-run survey average.

Firms created jobs for the 27th month running prompted by increased workloads and impending new project starts. The current period of staff hiring is the longest recorded by the survey in just over nine years.

"The surge in construction workloads over the past two-and-a-half years has created substantial skill shortages across the sector, with survey respondents reporting ongoing staff recruitment difficulties this summer," Markit Economist Tim Moore said.

On the cost front, sub-contractor charges rose sharply, but the rate of inflation was the lowest since April 2014. Lower oil-related prices contributed to the weakest overall rate of cost inflation for four months in August, the survey said.