An upturn in the property market helped to lift the construction industry last month, according to a key survey of the sector.
The IHS Markit/CIPS construction purchasing managers’ index rose from 54.6 to 56.8 in September. Economists had expected a figure of 53.7. Any reading above 50 indicates growth.
The improvement was led by housebuilders, where activity rose from 60.7 to 63.4. Commercial activity increased at its fastest pace in more than two years, rising from 52.5 to 54.5. However, civil engineering fell from 46.6 to 42.5 as big projects remained on pause.
“Anecdotal evidence suggested that the expansion in overall activity was predominantly driven by an improvement in demand conditions during September,” the report said.
“New orders rose for the fourth time in as many months, with panellists continuing to mention a release of pent-up demand. In fact, the latest increase was the strongest since just before the escalation of coronavirus disease.”
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Confidence hit a seven-month high, but businesses are still cautious. Construction companies continued to cut workers, albeit at a slower pace amid fears that output will not recover to pre-pandemic levels in the near future.
Samuel Tombs, at Pantheon Macroeconomics, the consultancy, said: “The recent rise in mortgage rates poses a serious threat to the recovery in housebuilding, especially since highly leveraged first-time buyers disproportionately buy new-build properties.”