Business activity in UK construction accelerated in May. At 55.9, the sector PMI was up 1.7 points from April's 22-month low and indicative of a very respectable period for growth.
May's improvement was led by stronger gains in residential construction together with a return to positive growth in civil engineering. However, commercial building work saw its slowest rate of expansion since August 2013.
Overall growth of new business picked up for the first time in three months and staffing levels saw their largest increase so far in 2015. Capacity constraints were once again reflected in the third fastest rise in sub-contractor rates in the survey's history. At the same time, input cost inflation moved back above April's 62-month low.
Today's results show that that there is plenty of life yet in the construction sector. Activity rates are well down on last year's highs but, with uncertainty about the general election now resolved, business confidence still climbed to its highest level since February 2006. The near-term outlook looks solid enough.
The Markit/CIPS UK Construction PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 170 construction companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on the regional and industry contribution to GDP. Unlike other PMIs, this PMI focuses on one industry, namely UK construction.
The survey is based on techniques successfully developed in the USA over the last 60 years by the National Association of Purchasing Management. It is designed to provide one of the earliest indicators of significant change in the economy. The data collected are not opinion on what might happen in the future, but hard facts on what is actually happening at 'grass roots' level in the economy. As such the information generated on economic trends pre-dates official government statistics by many months.
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