- Tim Moore, senior economist at Markit
U.K. construction data surprised strongly to the upside, with the output growing at the fastest pace in seven months in August, pointing to a continued robust recovery in the sector. The Markit/CIPS PMI for construction rose to 64.0 in August from 62.4 in July. Economists, however, had projected the index to decline to 61.4. It was the fastest gain in output since January and was the second-strongest rate of output growth since the pre-recession peak seen in August 2007. According to Markit, output grew in each of the housing, commercial and civil engineering markets. Employment growth in construction was strong, falling only slightly from a record high reported in July. Civil engineering was also buoyed by infrastructure spending and commercial construction grew strongly.
The latest government data on housing starts also suggest the construction sector remains on a solid footing as more housing starts help the sector boost its output. Nevertheless, construction of new homes remains below levels needed to meet demand and the Bank of England has stressed that risks from the housing market pose the biggest domestic risk to the country's economic recovery. There were also fresh warnings that skills shortages and pressures on supplies could undermine growth over the rest of the year.
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