UK house building grew at its fastest rate in nearly 11 years last month, driven by strong demand for new projects according to the Markit UK Construction Purchasing Managers’ Index (PMI) survey.
House building is part of the Construction PMI, which also included commercial building and civil engineering and the overall Index actually edged down in July, to 62.4 from 62.6 the month before, but is still showing expansion, as any reading over 50 denotes growth.
According to Markit’s report, construction activity has now grown for 15 consecutive months and hiring in the sector grew at its fastest rate in July since the survey began in April 1997. The report also suggested that civil engineering activity lifted strongly last month and that commercial construction also rose but at a slower rate than in June.
According to the report, there are signs of rising pay pressures to match increased workloads and rates charged by sub-contractors increased at a near-survey record pace, as their availability fell for the 13th consecutive month. There was also strong demand for construction materials in July, which placed additional pressure on suppliers.
The Bank of England has taken steps to try and reduce the threat of excessive indebtedness as a result of elevated house prices, and there have been some signs its actions have cooled the housing market. However, the construction sector is in favour with policymakers keen to see residential home building expand and ease supply constraints.
A spokesman for Markit said that July’s figures suggest the UK construction sector is enjoying its strongest cyclical upswing since the global financial crisis, while a new record rise in employment highlights that construction firms are increasingly confident about the sustainability of the upturn.