Further good news for the UK building sector

Figures from the closely-watched Markit/CIPS purchasing managers’ index (PMI) showed the sector kicked off 2014 in robust form as output growth picked up pace strongly in January, with a reading of 64.6 - the best since August 2007

Britain's builders shrugged off last month’s record rainfall as construction growth returned to pre-financial crisis levels thanks to the fastest pace of housebuilding for more than a decade, according to a survey.

Figures from the closely-watched Markit/CIPS purchasing managers’ index (PMI) showed the sector kicked off 2014 in robust form as output growth picked up pace strongly in January, with a reading of 64.6 - the best since August 2007.

The reading, where 50 separates growth from contraction, marked a sharp improvement on the 62.1 recorded in December and was the ninth month of rising output in a row.

Residential housebuilding was once again the star performer, with the steepest rise in activity since November 2003 as government initiatives such as Help to Buy and cheaper access to mortgage finance kept the sector’s revival firmly on track. Commercial project work and civil engineering activity also grew strongly, notching up the best performance since the summer of 2007.

David Noble, chief executive of the Chartered Institute of Purchasing & Supply (CIPS), said the construction sector had started 2014 in “formidable fashion”.

The cheer came despite last month’s dismal weather, which saw parts of southern England endure the wettest January since records began in 1910.

And the survey points to growth levels being sustained over the coming months as volumes of new work rose at the fastest clip since August 2007 and confidence among firms over the year ahead was the most positive since September 2009.

This supported higher levels of employment across the sector for the eighth month running.

The figures gave the pound a boost as they also allayed fears following an unexpected 0.3% fall in the official measure of construction output in the last three months of 2013, which was seen as a key factor behind a slight slowdown in wider economic growth, to 0.7% from 0.8% in the third quarter.

Chris Williamson, chief economist at Markit, said the strong January performance suggested the surprise fall in activity at the end of last year was a “blip in an otherwise buoyant upward trend, with the data possibly having been affected by adverse weather”.

The survey adds to Monday’s buoyant figures from the manufacturing sector as export growth reached a near three-year high.

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