UK construction expands at fastest rate
British construction activity grew at its fastest rate since the end of 2015 last month, as a pick-up in housebuilding helped builders shake off a lacklustre start to the year, a survey showed.
The Markit/CIPS construction purchasing managers’ index (PMI) jumped to 56.0 from 53.1, its highest since December 2015 and above all forecasts in a Reuters poll.
“A sustained rebound in residential building provides an encouraging sign that the recent soft patch for property values has not deterred new housing supply,” said Tim Moore, an economist at IHS Markit.
“Instead, strong labour market conditions, resilient demand and ultra-low mortgage rates appear to have helped boost work.”
Construction only accounts for about 6 percent of Britain’s economy. But alongside a similar robust manufacturing survey released on Thursday, it adds to signs that the economy may be recovering from near-stagnation at the start of 2017.
The picture will become clearer on Monday, when Markit releases its PMI for the much-larger services sector, which is more exposed to slowing consumer spending as households grapple with accelerating inflation.
Britain’s opposition Labour Party has highlighted squeezed living standards ahead of a national election due on June 8, though polls still show Prime Minister Theresa May’s Conservatives lead among those most likely to vote.
Friday’s report showed housebuilding rising at the fastest rate since December 2015, while commercial construction, such as shops and offices, rose by the most since March last year.
Builders hired more workers and ordered more supplies to deal with a faster inflow of new projects last month, Markit said. That contrasts with reports earlier on Wednesday and Thursday of greater caution from banks and homebuyers.
Mortgage lender Nationwide reported a third consecutive monthly decline in house prices on Thursday – the longest run of declines since the 2008-2009 recession – and the Bank of England said loan approvals fell to a 7-month low in April. – Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.