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Housebuilding drives bounce-back in construction

Housebuilding drives bounce-back in construction

The UK construction sector enjoyed its best month in over a year-and-a-half in May, according to the latest Purchasing Managers' Index survey by Markit and the Chartered Institute of Purchasing and Supply (CIPS).
 
Housing recorded its best rate of growth since December 2015, with civil engineering also performing well and commercial construction also still growing, although the latter was the weakest of the three parts of the sector and is still in the "slow lane" due to wider economic uncertainties, according to IHT Markit economist Tim Moore.
 
May's reading was 56.0, a significant jump from the 53.1 recorded in April, but still well below the post-recession peak of 64.6 in January 2014. 
 
The growth in the sector has helped boost recruitment, with this now at its highest since January 2016. Material prices continue to rise, but the level of inflation has eased. 
 
Commenting on the situation, director of consumer relationships at the CIPS Duncan Brock said: "After years of sluggish house building, the construction sector has snapped back into action in May. 
 
"Construction growth has surged to a 17-month high as the uncertainty caused by the EU referendum appears to be abating."
 
However, he added, only "time will tell" if the recent upturn in housebuilding activity represents the start of the "resurgence" that the market needs to see to close Britain's housing shortfall. 
 
Underlying demand for housing was identified as being a key feature of the increase in building, as it indicates developers can build homes in the knowledge that they should not be difficult to sell. The recent drop in house prices may help with this, as it suggests a market correction could be taking place that will ease affordability concerns.
 
The construction PMI follows the manufacturing PMI yesterday (June 1st), which showed a positive reading of 56.7 and recruitment at a 35-month high. The services PMI will be published on Monday. 

Image: iStock

 

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