Latest Markit/CIPS survey casts doubt on figures suggesting construction a drag on UK economy


Overall UK construction output continued to grow in October, helped by the fastest rise in new work in 12 months.

According to the latest Markit/CIPS survey, the latest rise in incoming new work was the steepest since October 2014 with firms highlighting new project wins from both public and private sector clients.

Business activity continued to rise in all three construction sub-categories, but only commercial building saw a faster increase than September.

It comes after the ONS estimated that construction was the only main economic sector to suffer a downturn in output in the third of quarter of 2015, contributing a 0.14 percentage point downturn to overall GDP.

Commercial was the key growth driver in October as it increased at the sharpest pace in eight months, with housing and civil engineering activity both expanded at slower rates than in September.

 Employment growth also picked up to its fastest rate since November last year.

The seasonally adjusted output index registered 58.8 in October, down from 59.9 the previous month but still above the neutral 50.0 threshold which separates expansion from contraction.

The survey said the outlook for construction companies remains upbeat, with 59% of firms expecting an increase in work and only 7% anticipating a decline.

It added that anecdotal evidence cited an “encouraging” number of new invitations to tender and expectations of solid spending levels among key clients.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: “October’s survey indicates that the UK construction sector remains firmly in expansion mode, although commercial building work was the only category to experience faster growth than in September.

“Another relatively buoyant construction PMI reading indicates that the sector remains in rude health.

“Rather than acting as a drag on the economy, as suggested by recent GDP estimates, the sector is continuing to act as an important driving force behind the ongoing UK economic upturn.”