As predicted in the lead up to the general election, the construction industry suffered in April and May due to the uncertainty surrounding the outcome, however house builders are digging again which according to Richard Carr is excellent for the UK’s economy.
Following the Conservative’s victory in early May, the construction sector grew rapidly in June as house builders set about meeting the country’s demand for housing.
Markit’s purchasing managers’ index (PMI) indicated that the sector grew fiercely during June. Its index was 58.1 and any number above 50 would imply that the industry was growing.
Tim Moore, senior economist at Markit, which compiled the report, said: “Construction companies experienced a growth rebound and surge in business confidence at the end of the second quarter.”
Richard Carr wrote recently about the rise in demand for UK homes and the report highlighted this as one of the reasons to the growth within the sector. Home building remained the strongest element of the industry.
Alan Clarke, an economist at Scotiabank, said: “Having spoken to people at the coalface, I gather that there is a bit of an election effect going on here.”
He said: “We suspect that there was an effort to minimise disruption from construction ahead of the election in order to minimise the feel-bad factor. Various projects were likely to have been held back to do this. So what we may be seeing here is a post-election catch-up.”
Confidence in the market following the stability that the general election result created will be buoyed by the recent stats and continue the recent rise in employment across the sector.
Its current health has allowed industry employers to hire staff at the fastest rate since last year, which is fantastic news for the economy as a whole.
Richard Carr isn’t surprised by the recent surge in activity, but he believes the government needs to re energise the LPAs into approving schemes!