Construction Growth Rebounds To 17-Month High
The UK construction sector grew at the fastest pace seen in 17 months, as low interest rates and strong labor markets, supported residential building activity.
The Purchasing Managers’ Index for the construction sector increased surprisingly to 56.0 in May from 53.1 in April, with survey results from IHS Markit and the Chartered Institute of Procurement & Supply surprising many in the sector.
The score was forecast to fall to 52.6 but instead signalled the fastest growth in the construction sector since December 2015.
While the headline index signaled increasing construction momentum, the latest reading was still much weaker than the post-crisis peak seen in January 2014.
Early indications suggest that the improvement witnessed in May was driven by the fastest upturn in residential work since the end of 2015, with survey respondents citing a strong pipeline of new development projects and resilient underlying demand conditions.
Data from the May survey also outlined the solid rises in civil engineering and commercial building. Although commercial development remained the weakest performing sub-category, the current growth was the fastest since March 2016. Nonetheless, respondents noted that heightened economic uncertainty continued to act as a brake on client spending.
Senior economist at IHS Markit, Tim Moore said: “The UK construction sector has started to recover strongly from its slow start to 2017. Housebuilding was the key growth driver, with work on residential projects rising at the fastest pace since December 2015.
“A sustained rebound in residential building provides an encouraging sign that the recent a soft patch for property values has not deterred new housing supply. Instead, strong labour market conditions, resilient demand and ultra-low mortgage rates appear to have helped boost work on residential development projects.”
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