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Construction confidence hits 11-year high

Construction output recorded its fastest increase for four months in the wake of May’s general election.

According to Construction Week, the Markit/CIPS UK Construction PMI for June has recovered to stand at 58.1, up from May’s 55.9 rating and April’s 22-month low of 54.2.

This latest reading is ahead of the long-run survey’s average of 54.6 and comfortably above the 50.0 ‘no change’ level, representing the fastest overall increase in construction activity since February.

Residential activity remained the fastest growing area of output in June, but there has also been a significant upturn in activity in both commercial and civil engineering.

The data also shows new orders grew for the second successive month, reaching their highest level since October 2014. Respondents to the survey attributed this to rising client confidence and improving business conditions across the UK economy.

Confidence in the sector seems high, with 62 per cent of respondents to the survey forecasting a rise in output over the next 12 months, while only 4 per cent expect a decline.

This latest data points to the strongest level of business optimism in construction since February 2004, with many businesses citing an increase in invitations to tender for new commercial projects, alongside strong demand for residential schemes.

A rebound in output has fuelled demand for skills in the sector, leading to an upturn in job creation during June. This latest increase in employment numbers was the fastest since December 2014.

Strains on subcontractor availability persisted over the past month, but the data suggests that the rise in subcontractor charges was the least marked for nine months.

Commenting on June’s survey, Markit senior economist Tim Moore said: “UK construction companies experienced a growth rebound and surge in business confidence at the end of the second quarter.

“Survey respondents cited robust inflows of new work in June, adding to already strong order books across the sector.

“Extra workloads and positivity regarding the year-ahead outlook meant that job creation accelerated to its strongest so far in 2015.

“The extent of the recent rise in construction optimism is partly down to relief that pre-election uncertainty has now passed, but it also suggests that firms are infused with confidence that underlying demand will continue to recover.”

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