Activity in the UK construction industry grew at its fastest rate in two and a half years last month.
And in a further boost to Labour’s electoral prospects, the manufacturing sector was bolstered earlier this week when factory activity grew at its fastest rate in more than 15 years.
Driven by growth in both the residential and commercial property sectors, April was the second month of consecutive growth in construction activity.
The construction Purchasing Managers' Index (PMI) rose from 53.1 in March to 58.2 last month, where anything above 50 indicates expansion. This is the highest the PMI has reached since September 2007, when the crisis was incubating.
David Noble, chief executive at the Chartered Institute of Purchasing & Supply, co-publisher of the construction survey, says: "It is encouraging to see the construction sector show signs of recuperation for the second month running and suggests that the whole UK economic recovery has real substance."
House building expanded at the fastest rate, jumping to 60.3 from 57.3. Civil engineering activity contracted in April, but at a slower pace than March.
The sheer strength of the rebound in demand for manufactured goods is highlighted by an unprecedented increase in backlogs of work, the largest for at least 11 years
Rob Dobson, economist
The Markit/Chartered Institute of Purchasing and Supply survey of purchasing managers reached its highest reading since September 1994, hitting 58. The figure was comfortably above both the point at which contraction becomes expansion – 50 – and analysts' consensus forecasts of 57.4 in a Reuters poll.
The sector, hit hard by recession, has been benefiting from a rise in overseas orders fuelled by the weak pound. Last month new export orders rose at the fastest pace since records began in 1996.
With the Conservatives traditionally winning the lion's share of business votes, and several letters signed by prominent business leaders condemning the Government’s proposed National Insurance rise published in recent weeks, the manufacturing sector has been a rare source of encouragement for Labour.
One of the key areas of policy difference between the two largest parliamentary parties has been business taxes, with the Tories advocating a flatter, simpler regime, while Labour will continue boosting struggling sectors with tax credits and grants. The manufacturing and engineering sectors have been among the chief beneficiaries from Labour's approach.
"The data point to manufacturing output growing by as much as 2% in the latest three months, suggesting the sector will provide a strong contribution to second-quarter gross domestic product," says Rob Dobson, senior economist at survey compilers Markit.
"The sheer strength of the rebound in demand for manufactured goods is highlighted by an unprecedented increase in backlogs of work, the largest for at least 11 years, which in turn has encouraged manufacturers to raise staffing levels to the greatest extent for three years. The feeding-though of rapid output growth to job creation is particularly good news, and bodes well for the sustainability of the UK economic recovery."
