February saw further acceleration in output by UK construction companies, driven by the fastest increase in new orders since October 2014, according to the latest Markit/CIPS UK Construction PMI survey.

Higher levels of activity were seen in all three sub categories of construction work. Residential activity experience the steepest rate of growth, while strong demand for construction materials, along with ongoing shortages of stock at suppliers, led to a sharp rise in input prices.

Rates charged by sub-contractors increased at the greatest pace since the

survey began in April 1997.

Adjusted for seasonal influences, the Markit/CIPS UK Construction Purchasing Managers' Index registered 60.1 in February, up from 59.1 in

January and above the neutral 50.0 threshold for the 22nd successive month.

The report said survey respondents attributed increasing output levels to strong workloads and rising spending patterns among clients.

Construction companies have also largely linked new business gains to improving economic conditions and positive sentiment towards the

business outlook. Yet, some respondents said uncertainties related to the

outcome of the General Election had resulted in delays to spending decisions among clients.


Higher levels of business activity led to further job creation across the sector in February. However, the rate of employment growth moderated to its least marked since December 2013.

The survey also found sub-contractor usage rose at an accelerated pace in February, leading to a sharp fall in the availability of sub-contractors.

February also saw worsening supply chain pressures across the UK industry, highlighted by vendor delivery times lengthening to the greatest degree since October 2014.

51% of the panel said they anticipated a rise in business activity over the next 12 months, while 9% predicted a reduction.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: "The latest survey highlights renewed vitality within

the UK construction sector, as output growth picked up further from the soft patch seen at the end of 2014. Housing, commercial and civil engineering

activity all expanded at the quickest rates since last October, helped by sharp rises in new business volumes and an improving economic backdrop.

"Stronger short term growth momentum in February was matched by positive sentiment towards the year-ahead business outlook. However, some

construction companies noted that the uncertain General Election outcome could prove a temporary bump in the road for new work, as some clients had

sought to delay spending decisions.

"Supply-chain pressures have been prevalent across the UK construction sector throughout the post-crisis recovery, which continued to drive up costs and lengthen delivery times for construction materials in February."

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: "The construction sector is awash with positive

sentiment, rejecting wholeheartedly the downbeat end to last year, with the steepest rise in output activity for four months. The good fortune comes in

threes – as respondents report a rise in staffing levels, higher levels of new orders and rising rates for sub-contractors."

"Clients are ready to spend, resulting in rising employment levels, but tempered by continuing skills shortages now seen for a number of months. Sub-contractors have been the winners; their rising rates evidence of continued demand for their capacity and the strongest since records began."

(IT/JP)