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Housing leads the surge in construction activity in July

The housing sector drove a surge in construction activity in July 2013, according to the latest figures from Markit/Chartered Institute of Purchasing & Supply.

The Markit/CIPS Purchasing Managers’ Index hit 57.0 last month, up from 51.0 in June and representing the third consecutive monthly rise in construction activity. An index figure higher than 50.0 denotes growth.

The figures point to growth across the whole industry, Markit/CIPS said, but residential was by far the strongest performing, with activity levels at their highest since June 2010.

Civil engineering returned to growth in the month, while the commercial sector recorded its highest level of activity since May 2012.

The growth was linked to stronger inflows of new business in July, with an increase in new orders for the third month running and the highest levels since April 2012.

Anecdotal evidence suggested that the improvement in housing demand underpinned the expansion in orders, alongside a general rise in spending owing to better economic conditions in the UK.

Cost inflation was found to have picked up to its highest rate in nine months and purchasing activity picked up significantly in the wake of activity growth, according to the survey.

CIPS chief executive David Noble said: “Homes are the beating heart of this rapid recovery in the construction sector, backed by a solid expansion in civil engineering and commercial activity.

“Better economic conditions, a jump in new business activity and the strongest level of confidence since the era of austerity began in 2010, strongly suggest this growth can be sustained into Q3.

“This rising confidence goes hand in hand with increasing output, underpinned by the expansion in new business orders, which was the steepest since April 2012.

“As a result, firms are starting to believe this is the real deal for the recovery, demonstrated by the strongest pace of job creation since December 2011.

“One constraint on the sector is the pressure on suppliers to meet the sharp rise in demand.

“Suppliers have been surprised by the speed and scale of the revival, leading to lengthy delivery times due to a shortage of capacity based on hard-learnt lessons over the past few years. This will be something to watch in the coming months.”

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