Construction sector grows robustly in March

Published 04th Apr 2011

Britain's construction sector grew faster than expected last month, notching a rate of expansion that almost matched the February's eight-month high, data showed on Monday.

The headline activity index of the Markit/CIPS survey of purchasing managers came in at 56.4 in March after hitting 56.5 in February. Analysts polled by Reuters poll had forecast a steeper fall to 54.9.

Construction makes up only 6 percent of British economic output, but has recently had a strong correlation with overall GDP growth.

Evidence that the sector was continuing to growth strongly reassured investors after a disappointing manufacturing survey on Friday.

"UK construction companies reported a strong end to the first quarter," said Sarah Ledger, an economist at Markit.

"The data add to the generally positive flow of data that have been seen since the new year, adding to evidence that the economy rebounded strongly from the surprise contraction of GDP in the final quarter of last year."

However, there were signs of accelerating price pressures with the rate of cost inflation hitting its highest in 31 months. The price of fuel, oil and steel were the biggest culprits.

Sentiment, while strong in historic terms, weakened for a second consecutive month, with firms citing looming government spending cuts.

"While construction appears to have seen decent growth in the first quarter of 2011 after output contracted 2.3 percent quarter-on-quarter in the fourth quarter of 2010, the outlook for the sector still looks challenging," said Howard Archer, economist at IHS Global Insight.

Source: ' Reuters '

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