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UK Construction Activity Rises At Fastest Pace In Nearly Two Years

UK construction activity rose at the fastest pace in nearly two years in June amid a phased restart of work on site as the coronavirus, or Covid-19, lockdown restrictions were eased thus boosting output volumes and business confidence, the purchasing managers' survey data from IHS Markit showed on Monday.

The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index surged to 55.3 in June, from 28.9 in May.

Economists had forecast a score of 47. A reading above 50 suggests growth in the sector.

The latest reading signaled the steepest pace of expansion since July 2018, IHS Markit said.

The reopening of the UK construction supply chain following stoppages and business closures during the early stages of the coronavirus disease 2019 (COVID-19) pandemic boosted activity.

"As the first major part of the UK economy to begin a phased return to work, the strong rebound in construction activity provides hope to other sectors that have suffered through the lockdown period," Tim Moore, economics director at IHS Markit, said.

"However, the ongoing reductions in staffing numbers seen in June provide a stark reminder that underlying conditions across the sector are a long way off returning to those seen before the public health emergency," Moore added.

In June, residential building was best performer amid various construction sectors with nearly 46 percent of survey respondents reporting an increase in housing activity.

The latest expansion of residential construction work was the steepest for just under five years, the survey found.

Commercial work and civil engineering activity also returned to growth in June, but the rates of expansion were softer than seen for house building.

Demand stabilized after three months of sharp declines, led by new work related to infrastructure projects, and purchasing activity increased at the fastest pace since December 2015.

However, employment levels continued to fall as concerns over the longer-term demand outlook led to cautious hiring policies. There were also redundancies alongside furlough arrangements.

Business expectations for the year ahead climbed to its highest since February amid a boost from the reopening of work on site, but were relatively subdued.

Exactly 46 percent of the survey panel anticipate a rise in business activity, while 31 percent forecast a reduction on concerns about the wider UK economic outlook, the survey found.

Purchasing costs rose at the fastest pace thus far this year as severe supply chain disruptions continued.

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