Chances of a summer rate rise on the up as recovery in UKs construction sector accelerates

Britain's construction sector saw a welcome surge in activity last month as growth rebounded to a seven-month high, new figures have revealed.

The latest update to the closely watched Markit/CIPS UK construction purchasing managers' index showed a reading of 53.1 in June, up from 52.5 in May, and the highest since November.

The improved economic data will strengthen the chances that the Bank of England will see fit to raise the UK interest rate before the summer is out, with the August meeting being the likely time for action. 

New orders in the building trade also rose at the fastest pace since May 2017, according to the survey. Housebuilding remained the area of strongest activity, although the report said commercial building work also helped drive the pick-up.

The data means June was the third month in a row construction sector activity has increased since the 'Beast from the East' snowstorms heavily disrupted building work during the winter and early part of March.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: 'With the fastest rise in new orders since May 2017, it appears the brakes are off for the construction sector.'

'Despite being hampered by economic uncertainty, firms reported an improved pipeline of work as clients committed to projects and hesitancy was swept away.'

But he cautioned that the sector is 'not out of the woods yet' due to lower than average confidence among building firms.

This latest data release follows hot on the heels of figures put out on Friday that revealed the snow-driven slowdown in the economy as a whole was not as bad as initially thought.

The Office for National Statistics revised economic growth for the first quarter of 2018 up to 0.2 per cent from the 0.1 per cent recording it had earlier reported.

'The construction industry somehow skipped springtime this year – and has been catapulted from a polar winter into a heatwave,' noted Blane Perrotton, managing director of property consultancy and surveyors Naismiths.

'True, the figures are flattered by comparison to the weak data recorded at the start of 2018. But such solid improvements in both output and new orders reveal some genuine momentum.'

'In part this is the release of pent-up demand, which has been building for months. There is only so long that investment decisions can be delayed, and on the front line we're seeing increasing numbers of developers opting to pull the trigger before the opportunity passes them by,' he added.