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Construction PMI records fastest growth in almost two years

Construction activity grew at its fastest level for 21 months, according to the latest statistics from Markit/Chartered Institute of Purchasing & Supply.

The UK Purchasing Managers Index for March 2012 was 56.7, up from 54.3 in February, meaning growth in construction has been posted since January 2011.

The commercial sector had the strongest performance last month, but growth in civil engineering activity reached its fastest pace in a year. Residential construction was found to grow slightly.

New orders grew at their fastest rate for four and a half years, according to Markit/CIPS, and have grown consecutively for the past six months. Employment gre modestly, but input costs accelerated at a faster rate than February and January, with raw material costs, particularly oil, said to be the main driver.

Markit chief economist Chris Williamson said: “Construction companies reported the largest monthly rise in new orders for four-and-a-half years, driving building activity higher at the fastest rate since mid-2010. Coupled with increasing activity recorded in the first two months of the year, this bodes well for the sector’s contribution to overall growth of the economy in the first quarter and will raise hopes that the country has avoided a slide back into recession.

“Looking ahead, the lack of big new projects such as Cross rail and the Olympics means expectations about the year ahead continued to run well below the pre-crisis peaks, but business confidence nevertheless reached the highest for nearly two years, driven up by expectations of increases in new order intakes and improving client optimism.

“The particularly encouraging news is that the improvement in confidence is generating more jobs, with employment rising modestly.”

 

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