Construction industry increases for second month

June’s data has showed the construction sector increased for the second consecutive month, driven by increased housing activity in the UK.

UK construction companies reported a secondary rise in business activity during June following from May. Markit/CIPS UK Construction Purchasing Managers’ Index noted an increase from 50.8 in May to 51.0, the strongest reading since May 2012. These higher output levels are thought to be due to greater levels of new orders, underpinned by a fifth consecutive monthly rise in residential building activity, which in turn attributed to rising employment levels in the sector. Evidence also suggested this rise in output was attributed to an underlying client demand in the house building sector.

This is not just good news for the construction industry - the commercial and civil engineering sub-sectors also saw business activity begin to stabilise, ending a four and five month periods of decline respectively.

Tim Moore, Senior Economist at Markit said, “Although the construction sector faces a long and fragile road to recovery, June’s survey highlights a new turnaround in optimism about future output levels in the sector. House building remains the mainstay of growth, helped by government incentive schemes, while it was also encouraging to see civil engineering and commercial building stabilise after protracted declines in 2013 so far.”

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply said, “A new dawn is emerging in the construction industry, with confidence of a sustained recovery beginning to build thanks to two months of consecutive output growth and the pace of new orders expansion hitting a 13 month high.”