UK Construction Growth Improves On Post-election Bounce, Tops Forecast

British construction expansion quickened more-than-expected in May, underpinned by a post-election bounce in new orders, survey figures from Markit Economics showed Tuesday.

The Markit/CIPS UK Construction Purchasing Managers' Index, rose to 55.9 in May from 54.2 in the previous month. Economists had expected the index to rise to 55.0.

A reading above 50 indicates expansion in the sector. But, the latest reading was still the second-lowest since June 2013.

The modest rebound was driven by a sharp and quickened increase in residential building activity, alongside a return to growth in the civil engineering sub-sector. At the same time, commercial building activity expanded at the slowest pace since August 2013.

New orders received by the construction firms increased for the first time in three months in May, driven by improved underlying client confidence and an associated post-election bounce in new order volumes.

Staffing levels in the sector increased sharply in May and the latest rate of job creation was the fastest in this year so far.

On the price front, input price inflation accelerated in May, after registering a 62-month low in April.

Looking ahead, business confidence across the construction sector picked up sharply over the month, with the degree of positive sentiment the highest since February 2006.

"Of course the real strength and longevity of this new momentum will be played out in the coming months but the expectation is the sector is likely to trundle along rather than produce the same elevated progress of last year, " David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said.

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