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Rate of construction growth remains above average

GROWTH in UK construction activity eased in April to its slowest pace since October 2013, but was still well ahead of the long-term average, a survey has revealed.

The Chartered Institute of Purchasing and Supply's construction activity index fell from 62.5 in March to 60.8 in April on a seasonally-adjusted basis, but remained well above the level of 50 which separates expansion from contraction.

CIPS noted that the rate of increase of housebuilding activity in April remained one of the fastest recorded over the past 10 years. It said residential construction had been the best-performing sub-sector in April, with the 15-month period of continuous growth in housebuilding activity the longest since 2006/07, ahead of the recession.

CIPS's survey showed that commercial property construction activity rose sharply in April. However, growth of civil engineering activity eased markedly last month to the weakest pace since September 2013.

The survey showed an acceleration in the rate of growth of new business for UK construction companies to the fastest pace since January. And it pointed to a sharp rise in the UK construction sector workforce. CIPS's survey has now recorded 11 consecutive months of growth in employment in construction.

Tim Moore, senior economist at Markit and author of the construction survey, was upbeat about the outlook for the sector this year.

He said: "Construction growth has started to moderate from the rapid pace seen over the winter, but strong rises in new work and payroll numbers provide ample optimism that output will expand strongly over the course of 2014."

Some experts have raised concerns about potential for over-heating of the housing market, following a recent surge in prices. The housing market has been particularly buoyant in London and south-east England.

However, Mr Moore said: "April's survey indicated that residential building was the fastest-growing area of UK construction activity, with the latest expansion correlating with at least 45,000 new housing starts per quarter. While there looks to have been a further steep upturn in new house building in April, the trend remains well short of estimated increases in underlying demand each year."

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