House building booms as growth fuels construction
BRITISH builders were still flourishing as 2014 kicked off, reporting the fastest business growth in the past six and a half years, even in January’s poor weather.
Markit’s construction purchasing managers’ index (PMI) for last month climbed to 64.6, the highest since August 2007, just before the financial crisis. The index is now just shy of the highest on record.
Once again, residential construction led the expansion, with the biggest growth in over a decade, a welcome indication given the UK’s crippling housing shortage crisis.
Both civil and commercial building also expanded at significant rates, up to the highest level in over six years.
Official data suggested a small dip in the sector in the fourth quarter, following a rapid expansion during the previous three months.
“The latest PMI reading is indicative of the construction sector growing at a quarterly rate of approximately four per cent. The strong survey data therefore suggest that the surprise 0.3 per cent fall in construction output indicated by official data in the fourth quarter merely represents a blip in an otherwise buoyant upward trend,” said Markit chief economist Chris Williamson.
The recent upswing for employment is also being boosted by the construction sector: January was the eighth consecutive month of employment growth, with job creation near November’s record high level.
Berenberg’s Robert Wood indicated that construction growth was now more likely to outstrip expectations than undershoot them: “The greater risk is probably that growth accelerates rather than slows down. We expect the UK to grow three per cent in 2014 and 3.3 per cent in 2015.”