The construction sector has welcomed a sharp increase in output growth at the start of 2014, the Chartered Institute of Purchasing & Supply (CIPS) has revealed.

The survey outlines dramatic growth across all three broad areas of construction with Residential construction remaining the best performing sub-category, followed closely by commercial building work and civil engineering activity. In all cases the latest expansion is the steepest in almost seven years since the summer of 2007.

Commenting on the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said:

"The construction industry has started 2014 in formidable fashion, enjoying its strongest growth in six-and-a-half years reinforced by a sharp rise in new business orders."

Employment in the industry has also experienced higher levels for eight consecutive months, with early 2014 featuring the longest continuous period of job creation since early 2008. Meanwhile, input buying was boosted by greater business activity in January, showing the latest expansion of purchasing activity was also the steepest since August 2007.


Complementing the much-needed increase in employment is the news that the volume of work received by UK construction companies has also increased for the ninth successive month in January 2014. Anecdotal evidence from survey suggests that these positive outcomes are a result of an ongoing upturn in domestic economic conditions, alongside greater access to funding among clients. All in all the sector is enjoying a period of relative prosperity and a 7-year high in confidence.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI®, said: "January's survey provides reassurance that the UK construction recovery remains on track. The latest data show positive developments on a number of fronts, with job creation rebounding at the start of the year while output and new business growth was the fastest since the summer of 2007.

"Housing activity growth now stands at its strongest for just over a decade, boosted by growing demand for new homes and improving confidence within the UK property market. Meanwhile, strengthening domestic economic conditions spurred greater spending on commercial projects in January.

"A sharp rise in civil engineering activity completed an impressive showing from all three sub-categories of construction monitored by the survey."

With the sharp increase in industry motion comes the revelation that suppliers haven't yet caught up with the renewed flurry of activity. Stronger demand for construction materials contributed to a further steep deterioration in supplier performance at the start of 2014. With longer vendor delivery times reported every month since September 2010, survey respondents have generally linked a reduction in capacity and low stocks held at suppliers as a hindrance to future growth.

Commenting on the situation, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, explained: "The one area which is beginning to be a concern is the ongoing pressure on suppliers to meet the rush in demand.

"As the industry's lifeblood, suppliers are still recovering from the recession, and until they get back to full capacity, the continued lengthening of delivery times may become a restraining force on the sector in the coming months."

(HMC/MH)