Construction sector confidence surges to 11-year high, but can the industry deliver?

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CONSTRUCTION ACTIVITY grew at its fastest rate in four months in June, and confidence in the sector surged to an 11-year high, as growth resumed after a lull in the run-up to May’s general election.

The monthly Markit/CIPS Purchasing Managers’ Index (PMI) rose to 58.1 in June from 55.9 in May, its biggest increase in a year.

“The extent of the recent rise in construction optimism is partly down to relief that pre-election uncertainty has now passed, but it also suggests that firms are infused with confidence that underlying demand will continue to recover,” said Tim Moore, an economist at financial data company Markit.

Growth was fastest in the house-building sector, but civil engineering projects and commercial work were catching up quickly.

Giles Taylor, KPMG’s northern head of property and construction, said: “Across the North the industry will soon be running white hot, as housing, commercial and infrastructure demand are rising together.

“What we are seeing is very unusual. Private demand is rocketing in response to an improving economy and much stronger business confidence.

“And public demand is sure to surge, given the Government’s ambition to invest in the infrastructure needed to turn the Northern Powerhouse vision into reality.

“The question is, can the industry deliver? It’s a real concern that the industry is about to be engulfed in a tidal wave of work but it’s struggling already with a skills shortage, weak balance sheets, and a lack of investment in capacity.”