The UK construction sector hit a three-month high after performing well in July.

Latest data from the Chartered Institute of Purchasing and Supply UK (CIPS) Purchasing Manager’s Index (PMI) of construction, have signalled a further marked improvement in operating conditions within the sector.

Growth of total construction activity was the fastest for over seven years, underpinned by the sharpest rise in new orders for more than ten years.

The headline PMI Index, a seasonally adjusted index designed to measure the overall performance of the construction economy, posted 61.8 in July, rising from 60.1 in the previous month, signalling a sharp increase in activity.

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The rise in the headline index was driven by growth across all three sectors covered by the survey, although the rate of increase in residential construction activity eased markedly. However, the rise in civil engineering construction activity was the fastest in the survey history, and commercial construction activity accelerated to a nine-month high.

The seasonally adjusted New Orders Index recorded a reading of 66.8 in July, rising sharply from 63.4 in the previous month, to signal a marked increase in volumes of incoming new business. Moreover, the rate of new order growth was the fastest for over ten years.

UK construction firms continued to hire additional staff in July, in anticipation of a sustained increase in construction activity. The seasonally adjusted Employment Index rose to 58.9 in July, the highest reading in seven years. Almost 29% of survey respondents signalled higher staffing levels compared with less than 8% that reported a decline.

Roy Ayliffe. CIPS Director of Professional Practice commented: “The immediate future for the sector looks bright, with some purchasing managers indicating that planned company expansion programmes are on the horizon.”

(LC)