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UK Construction Industry is Growing Again

Recent figures for the construction industry have given the area a boost of optimism.  With statistics continuing to show positive results, many analysts are revising their predictions for the industry upwards. As construction specialist recruiters, this obviously has significant implications for our business and so at Anderselite, we wanted to look into the latest findings.

New output highs

Construction output levels for August reached a new six year high. The Markit / CIPS construction purchasing managers index (PMI) for August was at 59.1, following a rise to 57 in July. This is the fourth month in a row the level has gone above 50, which indicates a period of growth. It was the highest level seen since September 2007 and above analysts' expectations. However, it's still around 15% below the levels that were achieved before the recession. The latest figures from the Office for National Statistics (ONS) show a 2% rise in construction output for July compared with the same month in 2012.

There has also been an increase in new construction orders, showing that businesses have a growing confidence in the market and are willing to start investing once again. The second quarter of the year saw a rise of 20%, which is the largest increase for four years. Across the year, orders have gone up by 32.8%, which is the highest since the start of records in 2005. 

Developers have been given a boost to their sales, due in part to Government incentives for home buyers. According to the National House Building Council (NHBC), new home registrations for July were up 19% against the same period last year. Across the whole of the second quarter, there had been an increase of 30% and the private sector had its highest number of registrations in a single month for more than five years.
Increase in GDP

 
The construction industry accounts for 6% of the UK's gross domestic product (GDP). In the second quarter of 2013, figures for this area alone increased by 1.4%. Overall GDP rose by 0.7%, partly in response to positive performances by construction companies. Economists are predicting that GDP could increase to over 1% for the third quarter.

Growth exceeding expectations

With the recent raft of positive results for the industry, the Organisation for Economic Co-operation and Development (OECD) has increased its predications for the current year. In May they predicted that the industry would grow by 0.8% in 2013. However, the latest figures have almost doubled to 1.5%, showing that experts have much more faith in the state of the industry than they did at the start of the year.

There are a number of reasons behind this improvement in the industry, with both increased consumer and business confidence helping to bolster the market. Government and Bank of England schemes have encouraged lenders to offer good value and affordable mortgages, enabling first-time buyers to get on the property ladder. Figures from the British Bankers Association show that mortgage approvals in June were at their highest level for 17 months, with a total of 37,278 approved. The Help to Buy programme has made it possible for more home buyers to put down deposits on new build properties. This has led to developers starting more projects and reigniting dormant schemes.

At Anderselite, we can see that the construction industry is still in recovery but more figures are starting to appear positive within the market on a regular basis. These aren't just one-off increases, but a month on month trend, which helps to increase optimism across the board. If developers and other key construction businesses are looking to invest and lenders are helping to supply mortgages, more buyers will be able to move. As this cycle continues, the industry will grow further and be able to maintain this healthy position.
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