Construction activity growth accelerated in December as contractors say they are upbeat about the future

The rate of total construction activity growth accelerated in December according to the latest report from the Chartered Institute of Purchasing and Supply.

Total construction activity rose to 57.5 from 54.8 the previous month. Growth was driven by strong increases in civil engineering activity which saw the most marked expansion in 37 months.

The fastest reported growth was in the commercial sector with the Commercial Activity Index rising to 58.1 from 54.6 in November.

Confidence regarding future levels of construction activity remained high in December with panellists more optimistic compared with the previous month. The seasonally adjusted Future Business Activity Index posted a reading of 72.6, up from November’s 71.9. Anecdotal evidence suggested that planned company expansions, in addition to anticipated growth in volumes of new orders, had underpinned optimism at the end of 2006.

Roy Ayliffe, director of professional practice at CIPS, said: “Growth in the UK construction sector continued in December with commercial activity experiencing the fastest rise. The main issue facing UK construction firms was the sharp rise in input price inflation. Many panellists reported rising energy costs and higher prices for various raw materials in December.

"However, as we look forward to this year, purchasing managers remain optimistic that growth will continue with orders and planned company expansions helping to increase confidence.”