Residential, Commercial Activity Keeps UK Construction Industry Elevated in December: Markit
The UK construction industry expanded sharply last month, growing at a pace not far off November’s six-year high.
Markit Group’s gauge of UK construction activity fell from 62.6 to 62.1 in December. The gauge has been above the 50.0 mark that separates expansion from contraction for eight consecutive months.
Business activity expanded sharply across all three broad categories of construction output: commercial, residential and civil engineering. New commercial projects underpinned the industry’s impressive gains in December, expanding at the fastest rate since August 2007. Meanwhile, residential housing projects eased from the November highs, but remained the fastest growing segment of the industry. Civil engineering activity rose at a similar pace to the previous month.
Incoming new orders expanded for the eighth consecutive month, as improved business confidence across the UK economy boosted client spending. Growing business confidence and a steady pace of new work drove staff recruitment in the construction industry for the seventh consecutive month, the longest sustained period of job creation in five-and-a-half years.
“The latest survey highlights that construction companies enter 2014 with the wind in their sails,” said Tim Moore of Markit Group. “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.”
The pace of UK recovery took the markets by surprise in 2013. The UK economy has been in expansion mode since the first quarter of 2013, led by rapid output growth in manufacturing and construction. According to Howard Archer of IHS Global Insight, the construction sector’s latest expansion bodes well for overall growth. UK GDP will expand 2.4 percent in 2014, according to the Paris-based Organisation for Economic Cooperation and Development.
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