Construction optimism ‘at highest since 2004’

MarkitBusiness confidence in the UK construction industry is at an 11-year high, the results of poll suggest.

Almost two-thirds of the business leaders questioned say they believe there will be a growth in output over the next year.

The monthly UK Construction Purchasing Managers’ Index (PMI) had dipped to a 22-month low in April amid industry uncertainty about the outcome of the general election.

But following the election’s decisive result, confidence rose in May and grew even more in June, according to the Markit/CIPS survey.

The index shows that although output is growing fastest in the housebuilding sector, there has also been growth in commercial building and civil engineering.

Purchasing managers responding to the survey say the growth they experienced in June was driven by increasing demand and healthy order books.

New business, they add, resulted from greater confidence among their own clients and the overall improvement in the UK economy.

Asked whether they thought the next 12 months would see further growth in output, 62 per cent of the purchasing managers surveyed said yes, with just 4 per cent saying they anticipated a decline.

And that, Markit says, means business confidence is now at its most robust since the early part of 2004.

Most of the firms which expect to see a growth in output over the next 12 months say they think it will be driven by strong demand for new homes and clients ready to up investment.

Others, meanwhile, say they have been receiving more invitations to tender for commercial projects, with some firms hoping to get business from major infrastructure schemes.

The growth in business confidence and output growth also helped stimulate the creation of new jobs in the industry last month.

And the greater workloads also resulted in construction firms experiencing a steep rise in purchasing activity during June.

Some companies, though, have reported experiencing a rise in the cost of materials, which they say is linked to stock shortages.

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