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Construction output rises sharply in February

Growth in construction continued during February, only slightly affected by the adverse weather conditions, according to the latest MARKIT/CIPS Purchasing Managers' Index.The index stood at 62.6 in February, down from 64.6 in January. While this represents a small easing of growth, employment levels in the sector reached a three-month high and firms' confidence about business prospects in the year ahead remains strong.Residential activity increased sharply during February, albeit at a slower pace than the previous four months. It is thought the adverse weather conditions had some impact on this sector, particularly affecting housebuilding activity. Growth in commercial activity also eased.Civil engineering performed best during February - its rate of expansion was the steepest since the series began in April 2007. Some data was buoyed by an increase in spending by local authorities on capital projects and maintenance - in some cases due to a response to flooding and adverse weather.There was a sharp rise in new work received during February, although again this rose at the slowest rate for four months. Anecdotal evidence suggests demand for new work was strong but sales were disrupted by the bad weather.Some 59 per cent of those surveyed expect a rise in output over the coming year, while only ten per cent forecast a reduction. Vendor lead times lengthened during February, as a result of strong demand for inputs and low stocks at suppliers. Higher cost burdens were reported, partly as a result of supply chain pressures.Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI said: "Construction output growth succumbed somewhat to the recent wet weather, with temporary disruptions from heavy rainfall most acute for house building activity in February. "Consequently, residential work ceded its place as the best performing category to civil engineering, as construction work related to flood relief and infrastructure maintenance rose sharply over the month." He added that confidence levels at firms remain high due to an improving economic outlook and the recovery in housebuilding.  

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