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Construction activity grows at fastest rate for four months

Construction activity rebounded in February following a dip towards the end of 2014, with expansion at its fastest rate since October 2014.

According to Construction News, all three subcategories of construction work (residential, commercial and civil engineering) saw a rise during the last month, with residential again growing at the fastest rate according to the Markit/CIPS UK Construction PMI for February.

The index for February registered at 60.1 in February, up from 59.1 in January.

The latest growth represents the 22nd consecutive month that the index has been above the neutral 50.0 threshold.

New business growth saw the fastest increase since October 2014 after hitting an 18-month low in December last year.

Most construction companies attributed these gains to improving economic conditions and positive business sentiment, but some reported that uncertainty surrounding the general election had resulted in delays to spending among their clients.

Just over half of the firms surveyed (51 per cent) anticipated a rise in business activity over the next 12 months, while only 9 per cent forecast a reduction over the same period.

Subcontractor usage rose at a faster pace in February, with the knock-on effect being a steep reduction in the availability of subcontractors.

In February, the average rate charged by subcontractors increased at the fastest pace since the survey began around 18 years ago.

Commenting on the data, Chris Williamson, chief economist at Markit, said: “February saw particularly solid growth of house building and commercial construction activity, both of which rose at the fastest rates since October, alongside a more modest rise in civil engineering work.

“The latter nevertheless also rose at the fastest rate since October, recovering further from a brief downturn in December.

“However, although construction sector optimism picked up in February, it remains well below last year’s highs, adding to evidence which suggest the pace of expansion, and therefore earnings and dividend growth, in the construction sector will slow in 2015.”

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