Construction firms “Highly Upbeat” about future
New research form Markit/CIPS Purchasing Managers’ Index (PMI) confirms construction firms are still “highly upbeat” about the future, buoyed by the quickest growth in new business for 12 months, according to a new report.
The number of people working in the UK construction industry, meanwhile, has not been higher since November 2014.
October’s Markit/CIPS Purchasing Managers’ Index (PMI) for the sector indicates an activity reading of 58.8.
Although that is slightly down on the seven-month high of 59.9 registered in September, a reading of 50 or above indicates growth in the sector, meaning that it has now experienced two-and-a-half years of expansion.
The report says the volume of new business in October rose faster than in any other period since the corresponding month of 2014.
It adds that while house-building and civil engineering has expanded, the trend has mainly been driven by growth in commercial building.
The latest PMI findings are at odds with official data that shows the sector contracted by 2.2% during July, August and September, holding back growth in gross domestic product (GDP).
Markit senior economist Tim Moore says October’s buoyant index reading suggests the construction industry is still in “rude health”.
“Another relatively buoyant construction PMI reading indicates that the sector remains in rude health,” he said.
“Rather than acting as a drag on the economy, as suggested by recent GDP estimates, the sector is continuing to act as an important driving force behind the ongoing UK economic upturn.”
Ed Stansfield, chief property economist at Capital Economics, says the index highlights the way confidence in commercial construction has grown as the uncertainties surrounding the Greek debt crisis and the UK general election have eased.
The latest data will be examined by members of the Bank of England’s Monetary Policy Committee when they meet on November 5 to set interest rates and publish a report on inflation.
Experts expect the committee to leave interest rates at their 0.5% historic low.