Housebuilding drives UK construction sector growth in September

Companies created jobs for the 28th month running and in September they hired new staff at the fastest pace for three months

A big pick-up in housebuilding helped the UK’s construction sector enjoy its fastest growth for seven months in September and boosted job creation, according to a survey.

All parts of the industry from civil engineering to housebuilders saw output rise in September. That lifted the key measure of business activity for the whole construction sector to 59.9 from 57.3 in August, the latest Markit/CIPS UK construction PMI showed.

That was higher than the consensus forecast for 57.5 in a Reuters poll of economists and well above the 50-mark that separates growth from contraction.

Housebuilding was the best performing part of the industry in September with the strongest growth for 12 months, as some companies reported a boost from new developments getting underway after delays earlier in the year. There had been reports of construction companies putting off projects before the general election in May as they awaited news on any potential tax and planning changes.

“Residential building saw the most decisive momentum shift in September, hitting a one-year high in the process, while commercial development also picked up speed as rising business investment and improving UK economic conditions acted to bolster demand,” said Tim Moore, senior economist at survey compilers Markit.

“A growth spurt for civil engineering activity completed the hat-trick of positive news for the main construction sub-sectors in September, helped by robust pipelines of infrastructure work.”

But there were renewed warnings from builders about skills shortages as well as signs new business was flowing in at a slower pace.

“Construction companies have recorded a steady slowdown in new business growth from June’s post-election peak and the latest upturn was the second-slowest since mid-2013,” said Moore.

Construction companies continued to create jobs for the 28th month running and in September they hired new staff at the fastest pace for three months. Companies said they continued to increase their use of sub-contractors last month and sub-contractor charges “continued to rise sharply”, the report said.

The pound strengthened on the back of the better than expected construction report, which contrasted with a weaker snapshot from Markit for the manufacturing sector published on Thursday.

While construction makes up only around 6% of the economy, the government will be encouraged by the news on housebuilding which it has vowed to boost to address a long-standing shortage of homes.

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