Construction growth rate best for eight months

Data for the UK construction sector in December has indicated the most marked rate of growth in the industry since April.

The headline Construction Purchasing Managers’ Index (PMI), a seasonally adjusted index designed to measure the overall health of the construction economy, registered 57.2, up from 56.7 in November, to show a strong rate of growth.

Over a quarter of survey respondents reported a higher level of activity than in the previous month, as underlying demand hardened further and more new contracts were awarded.

Roy Ayliffe, director of professional practice at the Chartered Institute of Purchasing and Supply, said:  "Purchasing managers saw 2004 close with strong growth across all areas of the construction sector, driven by higher levels of business activity resulting from new contracts.

"The commercial sector performed particularly well, as rates of growth reached their highest in almost five years. Firms continued to face intense pressure from rising input price inflation, as a result of high oil prices. Despite this, panellists remained optimistic that levels of activity would be higher in a year’s time.”

Of the three main industry sub-sectors included in the survey, commercial construction activity again posted the most impressive performance, growing at the most rapid pace for 57 months.

Housing activity also grew at a strong rate, similar to that seen since the beginning of Q3, while civil engineering activity contracted for the first time in four months, though only marginally.

New orders were up for the 74th month running, as firms successfully negotiated new contracts, while the rate of growth of new orders was strong, albeit less marked than in the previous month.

Employment increased for the 69th successive month, at a rate that was less marked than in November but was still robust. Firms reported that they had bolstered their workforces due to increasing workloads and planned expansions.

Sub-contractor usage continued to increase in December, at a moderate rate, while the availability of sub-contractors was unchanged.

Quantities of purchases by UK construction firms expanded at a strong rate that was similar to the previous month.