THE UK construction sector enjoyed its fastest monthly expansion for more than three years in July, driven by a surge in housebuilding activity, a survey has revealed.
The survey, published yesterday by the Chartered Institute of Purchasing and Supply and financial information company Markit, also showed the first rise in civil engineering activity in seven months. However, the pace of expansion in the civil engineering sub-sector last month was modest.
CIPS's purchasing managers' index for the UK construction sector jumped from 51 in June to 57 in July on a seasonally-adjusted basis, well above the level of 50 calculated by CIPS to separate expansion from contraction.
This jump signalled a sharp acceleration in growth of construction output to the fastest pace since June 2010.
July was the third consecutive month in which UK construction output has increased, according to CIPS's survey.
Housebuilding activity grew last month at the fastest pace since June 2010, and has now increased for six straight months.
Growth in commercial property construction activity meanwhile accelerated in July, from a marginal pace in June. Although commercial property construction activity grew at its fastest pace since May 2012, this sub-sector's rate of expansion was below its long-run average.
CIPS's survey showed that the UK construction workforce rose for a second consecutive month in July. The pace of job creation was the fastest since December 2011.
UK construction firms enjoyed their fastest monthly growth in new orders since April 2012.
The quantity of materials purchased by UK construction companies grew last month at the fastest pace since March 2012. And the survey showed the sharpest monthly increase in suppliers' delivery times since June 2007, which CIPS attributed to greater market demand and shortages of capacity at vendors.
Tim Moore, senior economist at Markit and author of the con-struction survey, said: "July's survey highlights a new wave of optimism across the UK construction sector, with companies reporting a pace of expansion in excess of anything seen over the past three years.
"The swing back to output growth broadened to include commercial and civil engineering activity during July, although housing construction remains the one thing crucial to the sector's strong upturn at present."
He added: "Construction firms saw the fastest improvement in new orders for over a year, which helped kick-start job creation and input buying growth during July.
"A switch to sharply-rising purchasing activity may have caught some suppliers by surprise, as delivery times lengthened to the greatest degree in years."
CIPS's survey signalled that UK construction companies were last month at their most confident since May 2010, in terms of the prospects for activity over the next 12 months.
David Noble, chief executive officer at CIPS, 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."
He added: "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."
Howard Archer, chief UK economist at consultancy IHS Global Insight, said of the survey: "This is significant as the construction sector has been a recent serious drag on UK economic activity despite its relatively small size."
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