Construction continued to power ahead in April with strong levels of new business and employment, according to a closely-watched economic indicator.
The strength of the reading may offer some encouragement to hopes for the recovery but continues to fly in the face of official data.
The purchasing managers index (PMI) for construction came in at 55.8, well above the 50 level that separates expansion from contraction, and followed a robust PMI reading for the first quarter.
However, the Office for National Statistics (ONS) last month reported that output in the sector shrank by 3pc in the first quarter and drove the economy back into recession – despite the solid PMIs. The conflicting data has raised concerns about the outlook for the construction sector.
Samuel Tombs, of Capital Economics, said the latest reading, which was lower than March’s 21-month high of 56.7 added to “signs that the economy started the second quarter on a weaker footing”. Confusion over the different data aside, the PMIs provided some cause for optimism.
“UK construction companies indicated a continued recovery in business activity and new order inflows in April, again led by work on commercial projects,” the survey’s compilers, Markit and the Chartered Institute for Purchasing & Supply, said.
Employment in the industry grew for a second month running and confidence in the year ahead remained much stronger than in 2011.
The rate of growth of new business underpinned rising confidence, with a reading of 58.8 – below March’s 4-year record but still above levels seen for much of the past two years.
Howard Archer, UK economist at IHS Global Insight, said: “On the face of it, this is a pretty encouraging survey that points to decent construction expansion in April.
Furthermore, pretty healthy new orders suggests the construction sector is set for ongoing output growth in the near term at least so is poised for appreciable expansion in the second quarter.”
He added, though, that “all construction data and surveys have to be taken with a considerable dose of salt at the moment as there are major discrepancies between what the surveys are indicating and what the hard data are showing”.
The construction PMI followed weaker than expected manufacturing PMI that raised fresh fears about the industry and its ability to lead the country back to growth.
telegraph.co.uk
The strength of the reading may offer some encouragement to hopes for the recovery but continues to fly in the face of official data.
The purchasing managers index (PMI) for construction came in at 55.8, well above the 50 level that separates expansion from contraction, and followed a robust PMI reading for the first quarter.
However, the Office for National Statistics (ONS) last month reported that output in the sector shrank by 3pc in the first quarter and drove the economy back into recession – despite the solid PMIs. The conflicting data has raised concerns about the outlook for the construction sector.
Samuel Tombs, of Capital Economics, said the latest reading, which was lower than March’s 21-month high of 56.7 added to “signs that the economy started the second quarter on a weaker footing”. Confusion over the different data aside, the PMIs provided some cause for optimism.
“UK construction companies indicated a continued recovery in business activity and new order inflows in April, again led by work on commercial projects,” the survey’s compilers, Markit and the Chartered Institute for Purchasing & Supply, said.
Employment in the industry grew for a second month running and confidence in the year ahead remained much stronger than in 2011.
The rate of growth of new business underpinned rising confidence, with a reading of 58.8 – below March’s 4-year record but still above levels seen for much of the past two years.
Howard Archer, UK economist at IHS Global Insight, said: “On the face of it, this is a pretty encouraging survey that points to decent construction expansion in April.
Furthermore, pretty healthy new orders suggests the construction sector is set for ongoing output growth in the near term at least so is poised for appreciable expansion in the second quarter.”
He added, though, that “all construction data and surveys have to be taken with a considerable dose of salt at the moment as there are major discrepancies between what the surveys are indicating and what the hard data are showing”.
The construction PMI followed weaker than expected manufacturing PMI that raised fresh fears about the industry and its ability to lead the country back to growth.
telegraph.co.uk
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