House building boosts construction market

The UK construction sector expanded at its fastest rate in 17 months in May, according to a new survey.

This was boosted by a rebound in house building.

The Markit/CIPS construction purchasing managers’ index rose from 53.1 to 56, which is the highest level since December 2015.

Builders also hired more workers and ordered more supplies to deal with an increase in new projects.

“A sustained rebound in residential building provides an encouraging sign that the recent soft patch for property values has not deterred new housing supply,” said Tim Moore, senior economist at IHS Markit. “Instead, strong labour market conditions, resilient demand and ultra-low mortgage rates appear to have helped boost work on residential development projects.”

Input prices for construction firms also rose at the slowest pace for seven months, despite the prolonged weakness of the pound.

The Builders Merchants Building Index (BMBI) also revealed three months of growth in the sales of building materials through UK generalist builders merchants in the first quarter of 2017.

The relatively mild and dry weather throughout the first quarter of the year helped to produce a 5.9% total sales growth when compared with Q1 of 2016.

John Newcomb, BMF managing director, said: “The good news is that the positive market trend experienced throughout the last three years continued into 2017. Trading was undoubtedly helped by a mild, dry winter, but if you look at these results in conjunction with the Federation of Master Builders’ Q1 State of Trade Survey of SME builders, the sentiment both among builders merchants and their SME builder customers is optimistic.

“However, all Q1 data was gathered before Theresa May called a snap election. There is always a period of uncertainty leading up to a national vote when people put plans on hold pending the outcome. We may well see a degree of stagnation in Q2 until the colour and shape of the new government is clear.”

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