UK construction sector sees strong growth

The UK's construction sector ended 2016 well, expanding at the fastest pace for nine months in December, according to a closely watched survey.

The Markit/CIPS purchasing managers' index (PMI) rose to 54.2 in December, up from 52.8 the month before. A figure above 50 indicates expansion.

However, the sector "continued to experience intense cost pressures".

Markit said that the increase in costs seen last month was the biggest since April 2011.

This came as suppliers passed on the higher costs of imported raw materials. The sharp fall in the value of the pound following last year's Brexit vote has made imported goods more expensive.

'Key engine'

Tim Moore, senior economist at IHS Markit, hailed "a solid rebound in construction output during the final quarter of 2016".

"All three main areas of construction activity have started to recover from last summer's soft patch, but in each case, growth remains much weaker than the cyclical peaks seen in 2014," he said.

"Housebuilding remains a key engine of growth for the construction sector, with the latest upturn the fastest for almost one year.

"Meanwhile, commercial activity was the weakest performing category in December, reflecting an ongoing drag from subdued investment spending and heightened economic uncertainty."

The construction survey, together with a similar survey of the manufacturing sector released on Tuesday, suggests the UK economy remained robust at the end of 2016, although the manufacturing survey also found firms facing rising costs.

The survey of the UK's dominant service sector is due to be released on Thursday.