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Strong growth in UK construction sector last month

THE UK construction industry has posted another month of strong growth although the pace of expansion fell back slightly in December.

The closely watched Markit/CIPS purchasing managers' index showed a reading of 62.1 last month, down on the 75-month high of 62.6 recorded in November, but still well above the 50 mark which separates contraction from expansion.

Economists pointed out the industry still appears primed to keep growing in 2014 with strong rises in output, new orders and employment seen in the latest survey.

Residential activity remained the fastest growing area in December but it had a slower pace of expansion then the previous month. Commercial project activity grew at the fastest rate since August 2007 while civil engineering activity was at a similar growth trend as in November.

Tim Moore, senior economist at Markit, said: "The latest survey highlights that construction companies enter 2014 with the wind in their sails. Most encouragingly, the improving UK economic outlook is helping boost private sector spending patterns, meaning that the construction recovery has started to broaden out from housing demand and infrastructure projects to include strong growth in commercial building work.

"Over half of all respondents anticipate increased output levels during the course of 2014, which is up sharply from one-in-three construction firms that expected growth at the same time one year ago."

As well as workforces increasing for the seventh month in a row there was the fastest rise in sub-contractor usage since April 2004.

Howard Archer, from IHS Global Insight, said although construction makes up only 6.3% of UK output, the performance of the sector adds to expectations the economy is sustaining its growth rate. He said: "The survey maintains hopes that the economy in the fourth quarter of 2013 could have at least matched the 0.8% quarter-on-quarter expansion achieved in the third quarter. Much will clearly depend on how well the services sector performed in the fourth quarter and how well consumer spending held up.

"Most evidence suggests that the services sector had a good fourth quarter, but there is a lot of uncertainty over just how strong consumer spending was."

Contextual targeting label: 
home improvement

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