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Construction index highest since February 1998

Construction firms have continued to ramp up their workforces and new orders have remained sharp this month, according to figures released by the Chartered Institute of Purchasing & Supply.

The Institute's Purchasing Managers' Index is at its highest since February 1998 after it rose from 61.8 in July to 64.8 in August largely underpinned by a marked rise in new order volumes. The report shows that this has been spurred on by the successful acquisition of planning permission as well as increased market activity.

The New Orders Index posted 67.6 which showed the sharpest rate of growth since April 1997.

The index- designed to measure overall performance in the construction economy- is based on a weighted average a number of survey measures including output, new orders, and employment, converted into indexes where 50 indicates no change on the previous month.

Roy Ayliffe, director of the Professional Practice at the institute said: 'Purchasing managers reported a ten-year high in the volume of new orders placed, which, in turn, has helped boost employment levels'.

However he warned that the continued inflation rise continued to place pressure on input prices which he said could explain why confidence in the sector had started to wane. #