UK construction’s rapid growth maintained in March

The Markit/CIPS Construction Purchasing Managers’ Index (PMI), a survey of 170 construction companies, edged down to 62.5 in March, barely changed from 62.6 in February and far above the 50 mark that denotes growth.

constructionWhile economists polled by Reuters had expected a rise to 63.0, the survey showed Britain’s builders in buoyant mood last month, with optimism rising to its highest level since January 2007 and firms hiring staff at the fastest pace in four months.

Britain’s construction industry, which accounts for about 7 percent of Britain’s economy, was hit hard by the financial crisis of 2007-09.

But it has been recovering since last year thanks to a combination of record low interest rates, government programmes to encourage people to buy new homes and falling unemployment.

The government announced last month that it would extend until the end of the decade a programme designed to encourage people to buy newly built homes.

Housebuilders saw the fastest rate of expansion, rebounding after bad weather in February that conversely boosted the civil engineering sector with flood relief projects.

“The rise in residential construction was one of the sharpest experienced over the past 10 years, helped by resurgent demand of development programmes and supportive funding conditions,” said Tim Moore, senior economist at survey compiler Markit.

Growth in British house prices cooled for a third straight month during March, despite recording their annual biggest rise in almost four years, data from mortgage lender Nationwide showed on Wednesday.

“However, the latest survey does little to dispel concerns that supplier capacity will become the fly in the ointment,” said Moore.

Building companies have said that supplies such as bricks and staff such as bricklayers are harder to find after a big downscaling of the sector in recent years.

Subtractor availability fell at the fastest pace since 2000 and the increase in lead times for the delivery of construction materials was one of the biggest since the survey started in 1997, said Moore.

Growth in British manufacturing unexpectedly eased to its slowest pace in eight months in March and prices paid by factories tumbled, a similar survey showed on Tuesday.

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