LONDON (dpa-AFX) - The British construction sector expanded at a faster than expected rate in June, with the growth the fastest in four months, on higher output and new orders, survey figures from Markit Economics and Chartered Institute of Procurement & Supply showed Thursday.
The seasonally adjusted Markit/CIPS UK Construction Purchasing Managers' Index rose to 58.1 in June from 55.9 in the previous month. Economists had expected the index to rise to 56.5.
A reading above 50 indicates expansion in the sector. The latest reading pointed to the fastest increase in overall construction activity since February and was well above the long-run average of 54.6.
The growth was driven by sharp and accelerated expansion of business activity, with residential activity remaining the fastest growing area of construction in June. Alongside, there were sharp upturn in both commercial and civil engineering activity growth.
Output increased in June, helped by improving client demand and strong order books. The growth of new work rebounded for the second straight month to its steepest since October 2014, linked to greater new business volumes, rising client confidence and improving business conditions.
Staffing levels in the sector increased further in June, supported by steeper output growth and a surge in business optimism. The rate of job creation was the fastest since December 2014.
On the prices front, input price inflation accelerated to a three month high in June, driven by higher construction materials prices and stock shortages at vendors.
Looking ahead, business optimism across the construction sector is expected to pick up to the strongest degree since February 2004. Higher investment spending among clients and strong demand for new residential projects were mostly cited for business activity expectations over the year ahead.
Moreover, an increase in new invitations to tender across a range of commercial projects, alongside hopes of new business gains from forthcoming major infrastructure projects were cited for business optimism by the survey respondents.
'Construction was on a real high this month with the sharpest rise in overall activity since February as the sector made up for lost ground since the General Election,' David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said.
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