Election boosts confidence to nine year high

Business confidence in the construction sector for May was the highest in nine years, according to the latest Markit/CIPS survey.

Construction companies on the survey panel indicated a sharp rebound in their year-ahead outlook for business activity, with 58% anticipating a rise in output and only 4% expecting a reduction, the highest level since February 2006.

Anecdotal evidence cited ongoing investment plans, new project wins and reduced uncertainty towards the business outlook.

The overall Markit/CIPS index, which measures the rate of increase or decrease in the activity of purchasing managers, also rose, to 55.9 in May, up from 54.2 in April, well above the 50.0 threshold which separates expansion from contraction. However, given the extent of the loss of momentum in the construction economy before the election, the reading for May was still the second-lowest since June 2013.

Staffing levels rose at a sharp and accelerated pace in May, with the latest increase in payroll numbers the fastest seen so far in 2015.

Greater workloads and efforts to guard against worsening sub-contractor availability were factors supporting sustained job creation, according to survey respondents.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said May’s survey provided the first sign of a “post election-bounce” in construction, but warned that “it is far from certain whether the relief rally in construction confidence will usher in a lasting turnaround in output volumes on the ground.”