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Fastest rise in construction activity since 2007

The UK construction activity has grown at the fastest pace since September 2007, according to the Markit/CIPS Construction Purchasing Managers' Index (PMI).
Construction activity in the UK increased in May for the third successive month.

A rise in new orders drove the increase in activity and also led to an increase in employment. Employment has risen for the first time since May 2008.

The seasonally adjusted PMI posted 58.5, rose slightly from the previous month's reading of 58.2 and was the strongest reading since September 2007.

'It was encouraging to see growth within the UK construction sector maintained during May, with all three sub-sectors (housing, commercial and civil) indicating an expansion in activity' said Sarah Ledger, author of the UK Construction PMI and economist at Markit.

She said: 'However, it is unlikely that the current rate of growth will be maintained over the medium-term. This partly reflects the low base from which expansion is being built, but also the uncertainty surrounding cuts in public spending'.

She added: 'Importantly, staffing levels were reported to have risen for the first time in two years during May. Whilst in absolute terms pre-recession employment levels are a long way off, this indicates that increased activity is having an overall expansionary effect on the industry.'

'It really is a double edged sword for the UK construction sector at the moment,' said David Noble, CEO at the Chartered Institute of Purchasing & Supply.

He added:'Purchasing managers say that on the surface things are looking positive with recent growth accelerating and more jobs on the horizon. However, the recovery is so fragile that it will be extremely vulnerable to the impending public sector cuts and it is unclear whether the recovery is robust enough to cope with such knock backs. The cuts are clearly coming and it's not long before we will start to see them making their mark'.
2 June 2010

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