Britain's construction industry at six year high

Friday 03 January 2014 10.49
The PMI is at its highest level since August 2007
The PMI is at its highest level since August 2007

Britain's construction industry enjoyed its second-fastest month of growth in more than six years in December, helped by the biggest increase in commercial projects since 2007, purchasing managers' data has shown.

The Markit/CIPS construction PMI fell to 62.1 in December from November's reading of 62.6.

This is the index's highest level since August 2007 when the financial crisis first started to take hold in Britain.

December's reading was a shade above economists' forecasts, and well above the 50 mark that separates growth from contraction on the index.

"The construction recovery has started to broaden out from housing demand and infrastructure projects to include strong growth in commercial building work," said Tim Moore, an economist at Markit, which compiles the data.

House-building slowed slightly in December, but remained the fastest growing area of construction - something that is likely to relieve the government, which launched programmes last year to encourage the building of new homes.

Mortgage lender Nationwide reported earlier on Friday that house prices in December were 8.4% higher than a year earlier - their biggest increase since June 2010 and one which Nationwide partly attributed to a chronic lack of building.

Friday's construction figures also suggest that Britain's economy made a strong end to 2013, after growing at an annualised rate of more than 3% in the second and third quarters of the year, faster than its long-term trend.

Yesterday a PMI for the manufacturing sector in Britain also fell slightly but continued to point to strong growth.

Construction only accounts for 6.3% of British gross domestic product, but contributed around a quarter of total growth between July and September.