UK construction sector beats expectations as activity in the housing sector is at its highest since 2003
The UK construction sector is continuing to grow strongly, albeit at a slightly lower pace than in June.
According to purchasing managers' index (PMI) data from Markit, the sector recorded a reading of 62.4, just above the consensus expectation of 62 and only slightly behind June's growth of 62.6. Any score above 50 indicates growth.
Last week's manufacturing PMI was disappointing, recording the slowest growth for a year, so these figures will be welcomed by the government.
Manufacturing PMI is considered far more likely to affect GDP, but with house prices receiving a lot of attention, the data will be keenly watched.
Importantly, activity in the housing sector was up on last month showing the fruits of strong year-on-year house price growth. Activity in the sector came in at 68 compared to 66.6 last month – the highest level since November 2003.
Analysts from Berenberg said:
The index signals extremely strong construction growth, particularly in housebuilding which apparently just saw its fastest expansion since November 2003. Construction job gains were the strongest since the survey began in 1997. The torrid pace of expansion in construction is clearly eroding slack with sub-contractors charges rising at a near-survey record pace.