Surprise bounce in building sector

The Markit/CIPS construction purchasing managers’ index (PMI) rose to 59.1 from December’s 17-month low of 57.6, topping all forecasts in a Reuters poll and far above the 50 mark that signifies growth.

While official data last week showed construction output shrank at the end of last year at the fastest pace since 20 12, the PMI pointed to better months ahead.

Growth strengthened across housing, commercial and civil engineering as new orders piled in at the fastest rate in three months. Optimism about the next year increased for the first time in three months, albeit from only a little from December’s 16-month low.

“The peak speed of the construction recovery seems to be over, but reports of its death have been greatly exaggerated,” said Tim Moore, Markit senior economist.

Construction, which accounts for just over 6 per cent of Britain’s economy, was hit hard by the recession following the global financial crisis, and the sector’s output is still around 8 per cent below its level in early 2008.

With oil prices more than halving over the last six months to below $50 a barrel, prices paid by construction companies for raw materials rose at the slowest pace since April 2013.