UK construction continued to expand at a very healthy clip in September. In fact, at 59.9 the sector PMI was up 2.6 points from its unrevised August reading, stronger than expected and at a 7-month high.
September's acceleration reflected faster growth in all three subsectors. Housing construction was again the most buoyant and activity rates here hit their best level in a year. However, commercial projects also saw a 7-month peak and civil engineering recorded its largest gain since February.
Growth of new business remained brisk, albeit the slowest in five months, and more than 50 percent of companies expected an increase in business over the coming year. Not surprisingly, headcount climbed sharply again and both sub-contractor usage and charges rose strongly. However, overall input cost inflation was partly restrained by weaker raw material and fuel prices.
Today's survey paints another vibrant picture of the UK construction industry. Skills shortages are becoming an increasing issue and wages are on the up. The BoE MPC will be monitoring developments very closely.
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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