Strong building output raises growth hopes
INCREASING orders and rising optimism pushed up activity in the construction sector in April, survey data showed yesterday, countering fears that the sector is dragging down the economy as a whole.
Markit’s purchasing managers’ index came in at 55.8, slightly down on March’s 21-month high of 56.7, but still indicating solid growth above the “no change” level of 50.
Civil engineering activity expanded with an index of 56.5, a very slightly slower expansion than the 56.6 in the previous month, while the housing component edged up to 51.3.
New orders continued to grow strongly at 58.7, though that too represents a slowdown from 63 in March.
Expectations of future business also kept growing rapidly at 66.4, compared with an index of 67.3 a month earlier.
Such positive figures have boosted employment levels moderately, the second quarter of jobs growth in construction.
“This better than expected PMI reading means the sector started the second quarter with activity stronger than its historical average,” said Barclays Capital analyst Blerina Uruci.
“By holding out at a decent level in April, the index suggests the positive momentum in activity seen last quarter has been maintained at the start of the quarter.”
However, analysts also sounded a note of caution, warning that austerity measures meant that the industry may run short of major projects.
“The worry is that the sector may suffer from a lack of large-scale new projects once current undertakings such as the Olympics are completed,” said Markit’s senior economist Tim Moore.
Furthermore, as construction only represents seven per cent of total GDP, economists warn this alone will not be enough to guarantee a solid recovery overall.