UK construction’s rapid growth maintained in March, but more homes needed says Yorkshire economist

Andrew McPhillips
Andrew McPhillips
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SURGING GROWTH among housebuilders helped Britain’s construction firms maintain a rapid pace of expansion in March and optimism about the months ahead hit its highest level in more than seven years, a survey showed.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI), a survey of 170 construction companies, edged down to 62.5 in March, barely changed from 62.6 in February and far above the 50 mark that denotes growth.

The survey showed Britain’s builders in buoyant mood last month, with optimism rising to its highest level since January 2007 and firms hiring staff at the fastest pace in four months.

The construction industry, which accounts for about 7 per cent of the UK economy, was hit hard by the financial crisis. But it has been recovering since last year thanks to a combination of record low interest rates, taxpayer-backed programmes to encourage people to buy new homes and falling unemployment.

The Government announced last month that it would extend until the end of the decade a programme designed to encourage people to buy newly built homes.

Housebuilders saw the fastest rate of expansion, rebounding after bad weather in February that conversely boosted the civil engineering sector with flood relief projects.

Andrew McPhillips, economist at Yorkshire Building Society, said: “These figures show that house building continues to increase strongly and provide a source of growth in the economy. This is important as the current rate of housing growth is still below that needed to keep up with demand.

“Builders should be starting more projects as the UK economy continues to improve and the Government’s extension of Help to Buy until 2020 provides reassurance that demand for new property will remain for a suitably long period of time.”

Growth in house prices cooled for a third straight month during March, said Nationwide.