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Construction orders hit nine-month high UK construction sector sees strong growth
(about 1 hour later)
UK construction companies ended 2016 well, with the fastest rise in new order volumes for nine months. The UK's construction sector ended 2016 well, expanding at the fastest pace for nine months in December, according to a closely watched survey.
The Markit/CIPS purchasing managers' index (PMI) rose to 54.2 in December, its best since March and higher than a prediction of matching November's 52.8. The Markit/CIPS purchasing managers' index (PMI) rose to 54.2 in December, up from 52.8 the month before. A figure above 50 indicates expansion.
However, the survey also revealed cost pressures, with the latest rise being the biggest since April 2011. However, the sector "continued to experience intense cost pressures".
Markit's Tim Moore hailed "a solid rebound in construction output during the final quarter of 2016". Markit said that the increase in costs seen last month was the biggest since April 2011.
This came as suppliers passed on the higher costs of imported raw materials. The sharp fall in the value of the pound following last year's Brexit vote has made imported goods more expensive.
'Key engine'
Tim Moore, senior economist at IHS Markit, hailed "a solid rebound in construction output during the final quarter of 2016".
"All three main areas of construction activity have started to recover from last summer's soft patch, but in each case, growth remains much weaker than the cyclical peaks seen in 2014," he said."All three main areas of construction activity have started to recover from last summer's soft patch, but in each case, growth remains much weaker than the cyclical peaks seen in 2014," he said.
Rural homes "Housebuilding remains a key engine of growth for the construction sector, with the latest upturn the fastest for almost one year.
"Housebuilding remains a key engine of growth for the construction sector, with the latest upturn the fastest for almost one year." "Meanwhile, commercial activity was the weakest performing category in December, reflecting an ongoing drag from subdued investment spending and heightened economic uncertainty."
The industry could receive another boost if government plans to build 200,000 new rural homes can move past local planning restrictions. The construction survey, together with a similar survey of the manufacturing sector released on Tuesday, suggests the UK economy remained robust at the end of 2016, although the manufacturing survey also found firms facing rising costs.
Figures on Tuesday also showed a rise in manufacturing, but both sectors face the challenge of the slump of sterling. affecting future costs. The survey of the UK's dominant service sector is due to be released on Thursday.
The figures also reveal that UK construction output shrank by 0.6% in the three months to October, a slightly smaller decline than in the previous three-month period.