Britain’s booming property market has trigged the biggest surge in house building for more than a decade.
Construction activity has grown for the last 15 months and firms are now hiring staff at the fastest level since an industry survey began in April 1997.
However, the Chartered Institute of Purchasing & Supply warned that growth could be curtailed in the coming months by suppliers struggling to keep pace and the ‘sharpest deterioration in the quality of subcontracted work since 1999’.
The home building market grew at its steepest level since November 2003, driven by strong demand for new housing projects, according to July data from the Markit/CIPS UK Construction PMI report.
Overall, the index edged down to 62.4, down from 62.6 in June, but activity remained well above the 50 level that divides growth from contraction and was above City expectations of 62.
Tim Moore, senior economist at Markit, said: ‘July’s figures suggest the UK construction sector is enjoying its strongest cyclical upswing since the global financial crisis, while a new record rise in employment highlights that construction firms are increasingly confident about the sustainability of the upturn.’
The report showed that civil engineering activity lifted sharply in July, while commercial construction also rose but at a slower rate than in June.
David Noble, chief executive of the CIPS, said: ‘The house building sector is racing ahead this quarter with the fastest growth in construction of homes for over a decade.
‘The industry as a whole continued its impressive growth, dipping slightly from last month’s high.’
But he added: ‘One concern however, is the strain on supply chains that could become a roadblock to sustained growth in the future.
‘Construction firms reported the sharpest deterioration in the quality of subcontracted work since 1999, which combined with lengthening supplier delivery times could conspire to put the brakes on the sector’s growth.
‘But there’s evidence that firms are starting to look beyond in demand sub-contractors and instead further boost their own staffing levels, which goes some way to explaining the record rise in employment levels.’
Housing minister Brandon Lewis said: ‘The last administration’s housing crash led to the loss of a quarter of a million construction jobs – so I’m pleased to see from these figures that the industry is bouncing back, with hiring at record levels.’
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