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Construction sees third successive month of growth

Construction sees third successive month of growth

The UK construction sector saw its third successive month of growth in November, according to the latest Purchasing Managers Index (PMI) survey by IHT Markit and the Chartered Institute of Purchasing and Supply (CIPS).

November's reading of 52.8 was slightly up on the 52.6 recorded in October, and this marks a continuation of the upward trend that followed the major post-referendum slump in the summer. It was the best reading seen in the series since March.

The strongest area of activity remained the residential sector, although growth in November was weaker than in September and October. However, commercial construction began a recovery after a poor few months. Growth remained weak in civil engineering, although this area may be boosted by the Autumn Statement announcements of new infrastructure projects.

Recruitment continued to increase and the level of staffing included not just the addition of more permanent workers, but also the highest use of subcontractors so far this year.

These improvements reflected a rise in new orders and fairly robust levels of confidence, although in the latter case this was still down on the highly positive outlook of the last couple of years and is similar to 2013 levels.

Giving his overview of the situation, IHT Markit economist Tim Moore said: "The brighter picture reflected another solid contribution from residential building and renewed growth in commercial work, which some companies linked to a resumption of projects that had been delayed after the Brexit vote."

He added that "lingering" economic worries in the wake of the referendum were the reason for the level of confidence being what it was.

CIPS group chief executive David Noble said the overall picture was that of a construction sector on a "firmer footing", but he added that lingering cost inflation pressures could pose a significant threat, particularly if they strengthen going into 2017.

The construction PMI reading was lower than those for services and manufacturing. The former saw its best result since January, with a reading of 55.2, but manufacturing dipped from 54.2 to 53.4 as the effects of the weak pound bore down on the cost of imported materials.

Image: iStock


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