Construction output up for second consecutive month

UK construction output grew for a second consecutive month in June, with the strongest monthly performance for a year, according to the latest Markit/CIPS survey of construction buyers.

The index hit 51.0 in June, up fractionally from the 50.8 recorded in May, which was the first result over the 50 barrier, which separates growth from contraction, since October 2012.

The survey said this was the strongest reading since May 2012, with higher output levels driven by a solid rate of new order growth in June, which in turn contributed to rising employment levels.

The survey said the growth was underpinned by a fifth consecutive monthly rise in residential building activity. Although housing activity was the strongest performing sub-sector in June, the rate of output expansion eased from a 26-month high in May.

The survey also found that around four times as many companies (41%) anticipated a rise in business activity as those that forecast a drop (10%). This meant that the overall degree of business confidence in the construction sector was the strongest since April 2012.

The survey also found that improved expectations about the business outlook and rising levels of new work underpinned a rise in construction workforce numbers for the first time since February.

Although the latest survey signalled only a moderate rise in employment levels, the rate of job creation was the most marked since September 2012.

Other findings included:

• Levels of business activity stabilised during June in the commercial and civil engineering sub-sectors, ending four-month and five-month periods of decline respectively.
• New business increased for the second month running in June. The rate of new order growth accelerated since May and was the strongest for just over a year.
• Anecdotal evidence pointed to signs of an upturn in underlying client demand and stronger levels of new work in the house building sector.