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Economy: Markit/CIPS survey reveals strong growth for construction sector

15:26 03 January 2014

Housebuilding continued to lead the way as the construction sector enjoyed another month of strong growth during December, according to the latest Markit/CIPS survey.

Housebuilding continued to lead the way as the construction sector enjoyed another month of strong growth during December, according to the latest Markit/CIPS survey.

New year cheer over the economy continued today as figures revealed activity in the construction sector grew at its fastest pace for more than six years at the end of 2013.


The fourth quarter rate of expansion was the best since the third quarter of 2007, despite a slight easing in the pace of growth last month from a peak in November, according to the closely-watched Markit/CIPS purchasing managers’ index for construction.

The survey showed a reading of 62.1 in December, down from 62.6 the previous month, but still well above the 50 level that separates growth from contraction.

Apart from November, the reading has not been as high since August 2007 and it marks eight months of continuous growth in the sector.

Chris Williamson, chief economist at Markit, said: “The decline merely signalled a modest easing in the rate of expansion from the surging pace of growth.”

David Noble, chief executive of the Chartered Institute for Supply and Purchasing (CIPS), added: “Continued strong expansion marked an outstanding end to 2013 for construction, positioning the sector on a solid recovery path for 2014.”

The figures add to the picture of a sustained recovery, after Markit/CIPS data from the manufacturing sector on Thursday showed it managed its best quarterly performance in two-and-a-half years at the end of 2013.

Meanwhile, a survey from Nationwide showed house prices surged by 8.4% over 2013 across the UK as the market revival became increasingly broad-based and retailer Next joined John Lewis and House of Fraser in reporting strong sales growth during the key Christmas tradinig period on the high street.

The construction PMI figures showed house building. a sub-sector buoyed by initiatives such as Help to Buy and Funding for Lending. remained the fastest growing area of activity in December, though it posted a slower pace of growth than November. Work on commercial projects and civil engineering activity continued to grow strongly, the survey found.

Meanwhile, the majority of firms were optimistic about the coming year, with 57% expecting growth compared with 10% forecasting decline.

Stronger business confidence and a sustained improvement in new order levels continued to drive staff recruitment, the survey found, with increased workforce numbers recorded for the seventh month in a row, the longest continuous period of job creation in five-and-a-half years.

Markit senior economist Tim Moore said: “The latest survey highlights that construction companies enter 2014 with the wind in their sails.”

Howard Archer, chief UK and European economist at IHS Global Insight, said the figures added to hopes that overall economic growth in the fourth quarter can at least match the 0.8% rise in the third quarter.

Continued strong house building was welcome given the shortage in supply while the expansion in the commercial and civil engineering sectors was also positive, he added.

“What is particularly encouraging and bodes well for the sustainability of the construction upturn is that the construction managers survey indicates that the improvement in activity is now widespread across sectors,” he said.



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