Financial News

  • 6 March 2014, 6:51

Flood Aid Drives Civil Engineering Record

The legacy of the worst winter storms for 250 years damaged the recovery in house-building but helped the civil engineering industry record its strongest month since April 1997.

The construction of homes grew at its slowest pace for four months in February, according to the Markit/CIPSPurchasing Managers' Index (PMI) for the sector, where at figure above 50 denotes growth.

The PMIslipped to 62.6 from 64.6 in January - hurt by heavy rain, strong winds and floods which affected house-building particularly.

The survey's findings correspond with an earlier warning from Bank of England Governor Mark Carney, who said the economy might suffer a temporary hit because of the adverse conditions.

By contrast, civil engineering activity saw its strongest month since April 1997, the study found, helped by higher spending by local authorities which, in some cases, was in response to the rain as diggers were called in to protect homes and businesses from rising waters.

Job creation was at its highest in three months as 59% of construction companies expected a rise in output over the year, compared with only 10% predicting a fall.

Britain's construction industry has been recovering since last year thanks to a combination of record low interest rates, government programmes to encourage people to buy new homes and falling unemployment.

The sector, which accounts for about 7% of gross domestic product (GDP), has been facing strong demand to build more properties to boost housing supply.

A shortage of new homes amid high demand for properties has been cited as the core reason for property prices rising to, what some critics claim are, unsustainable levels.

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