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Contractors could benefit from construction sector’s three year high in growth

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Contractors working in the construction industry will be very pleased to hear that their sector has seen the strongest output growth for three years.

The UK Construction Purchasing Managers Index (PMI), compiled by Markit and the Chartered Institute of Purchasing & Supply (CIPS) revealed that growth of both business activity and incoming new business accelerated sharply compared to the previous month.

The UK Construction PMI, which is seasonally adjusted, went up from 51.0 in June to 57.0 in July, with the index being above the no-change value for the third month in a row.

According to the study, one of the main reasons for this exceptionally strong growth, is due to the upturn in house building, as explained by Chief Executive Officer at the Chartered Institute of Purchasing & Supply, David Noble, “Homes are the beating heart of this rapid recovery in the construction sector, backed by a solid expansion in civil engineering and commercial activity. Better economic conditions, a jump in new business activity and the strongest level of confidence since the era of austerity began in 2010, strongly suggest this growth can be sustained into Q3.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said, “July’s survey highlights a new wave of optimism across the UK construction sector, with companies reporting a pace of expansion in excess of anything seen over the past three years. The swing back to output growth broadened to include commercial and civil engineering activity during July, although housing construction remains the one thing crucial to the sector’s strong upturn at present.

“Construction firms saw the fastest improvement in new orders for over a year, which helped kick-start job creation and input buying growth during July. A switch to sharply rising purchasing activity may have caught some suppliers by surprise, as delivery times lengthened to the greatest degree in over seven years.”

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