"Housing activity remains the brightest spot in the construction sector, but its outperformance has started to fade. Moreover, residential construction continues to see the most intense pressures on supply chains and skilled labour availability."
- Tim Moore, senior economist at Markit
Britain's activity in the construction sector rose at the fastest pace in eight months in September, sparking optimism over the country's economic outlook. U.K. construction PMI index jumped to a seasonally adjusted 64.2 last month, up from the August's reading of 64.0, whereas economists had expected a decline to 63.5 in September. The strength in the construction sector offset slowing growth in the manufacturing, where the corresponding PMI survey showed a decline to the lowest level in 17 months. Robust output growth was kept across the country's construction sector in September, bolstered by sharp increases in housing, commercial and civil engineering activity. Nevertheless, slower increases in new orders and employment subcomponents raised questions about durability of the upturn. Growth in new orders and employment slowed to a four-month low as builders faced sharply increasing costs and bottlenecks in the supply of some materials, resulting in the most cautious outlook from construction firms in more than a year.
The government is trying to support the construction of new homes to address a shortage of supply, which has pushed prices up over the past year. The Bank of England has described the housing market as the biggest domestic threat to the U.K.'s economic recovery.
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