According to the latest Markit/CIPS UK Construction PMI, following a dip at the end of 2014, the UK construction industry unexpectedly surged to a four-month high in February, lending to a strong start in 2015.
Residential, commercial and civil engineering all saw a rise in February, with the index for February registered at 60.1 – an increase from 59.9 in January. Most firms surveyed attributed growth to improved economic conditions, strong workloads and growing confidence amongst clients.
Chris Williamson, chief UK economist at Markit, said: “The survey has recorded a remarkably strong spell of continuous growth since July 2013, fuelled initially by rising house building activity amid government incentives for homebuyers but rapidly becoming more broad-based as the wider economic recovery took hold. The latest data suggest that, while the pace of expansion has cooled since the peaks seen late last year, the recovery retains strong momentum.”
It is predicted, however, that growth is likely to slow down later on in the year: “However, although construction sector optimism picked up in February, it remains well below last year’s highs, adding to evidence which suggest the pace of expansion, and therefore earnings and dividend growth, in the construction sector will slow in 2015.
“The sector is likely to see weaker demand for building projects as some uncertainty sets in around the general election.”
In April, the return of cuts in public services will affect firms that depend on housing repair and maintenance work, dampening activity within the sector. Most councils have agreed to cuts of 12% on average for the 2015/2016 financial year.
The construction industry accounts for approximately 6% of the UK economy.