May 2, 2014 / 8:31 AM / in 4 years

UK construction sector grows for 12th month running in April - Markit

LONDON, May 2 (Reuters) - Britain’s construction sector expanded for the 12th straight month in April, albeit at the slowest rate in six months, a survey showed on Friday.

The Markit/CIPS UK construction PMI eased to 60.8 in April from 62.5 in March, undercutting expectations for a reading of 62.0 in a Reuters poll of economists.

But the index has now been above the 50 threshold denoting growth for a full year, with housebuilding the best-performing construction sector last month.

“Better economic conditions, a surge in house building, improved access to finance and greater investment spending are all important tailwinds for UK construction growth this year,” said Tim Moore, senior economist at survey compiler Markit.

Civil engineering activity slowed sharply, with some firms reporting an easing in the amount of business coming from flood relief work earlier in the year, Markit said.

Britain’s construction industry, which accounts for just over 6 percent of the economy, was hit hard by the financial crisis of 2007-09.

It has been recovering since last year thanks to record-low interest rates, government programmes to encourage people to buy new homes and falling unemployment, although new house building has struggled to keep pace with demand.

“While there looks to have been a further steep upturn in new house building starts in April, the trend remains well short of estimated increases in underlying demand each year,” said Moore.

A lack of supply of new houses has been one factor pushing up house prices, according to mortgage lender Nationwide, which said on Thursday that house prices had risen 10.9 percent in the year to April, the biggest increase since June 2007.

The Bank of England’s outgoing chief economist Spencer Dale said on Wednesday that policymakers “should be nervous” about the housing market, although he said he did not see signs of a price bubble.

Markit said construction companies continued to take on staff at a strong pace, albeit easing back slightly from March.

A similar survey on Thursday showed surging output and an influx of orders helped British manufacturing activity grow last month at a much faster rate than expected, boding well for Britain’s economic recovery.

- Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.

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For further information, please phone Markit on +44 20 7260 2454 or email (Reporting by Andy Bruce; Editing by Hugh Lawson)

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