UK construction industry at three-year high, PMI survey indicates

House building has helped the construction sector to grow

The UK's construction industry has reached its highest level of activity since June 2010, a survey has indicated, boosted by a continuing surge in house building.

The Markit/CIPS Construction Purchasing Managers' Index (PMI) rose to 57.0 in July from 51.0 the month before.

A figure above 50 indicates expansion.

"July's survey highlights a new wave of optimism across the UK construction sector," said Markit senior economist Tim Moore.

He added that construction firms were reporting "a pace of expansion in excess of anything seen over the past three years".

The government announced measures in March 2013, such as Help to Buy, to support people looking to buy their first home and to spur construction of new properties.

The construction sector has been an area of weakness in the UK economy.

First estimates for second-quarter GDP show the construction sector grew by 0.9%, but it still remains more than 16.5% lower than it was before the start of the financial crisis in 2008.

Overall GDP growth for the April-to-June period was 0.6%.

Howard Archer, chief European and UK economist for IHS Global Insight, hailed the survey as "more good news for the UK economy, with the construction sector seemingly increasingly shrugging off its long-term problems and now contributing to growth".

On Thursday, the PMI survey for manufacturing indicated that the sector grew in July at its fastest pace for more than two years.

The reading of 54.6 for last month, from an upwardly revised June figure of 52.9, was the strongest since March 2011 and marked the fourth month in a row of expansion.

PMI surveys are based on data from various private-sector firms, which supply information on factors such as output, new orders, stock levels, employment and prices.