UK construction growth boosted by new orders

Building site
Image caption Growth in the house-building sector in May improved after slowing in April

Growth in the UK construction industry accelerated slightly in May after slowing in April, thanks largely to a rise in new orders, a survey suggests.

The Purchasing Managers' Index (PMI) for construction rose to 54.0 from 53.3 the previous month. Any reading above 50 indicates growth in the sector.

Employment also increased after a 10-month run of cuts.

On Tuesday, research suggested the number of construction firms going bust in the UK had increased sharply.

Accountancy firm Wilkins Kennedy said that almost 1,000 companies went into insolvency in the first three months of the year, a rise of 19% from the previous quarter. The increase was down to public sector spending cuts, the firm said.

'Positive sentiment'

However, the latest PMI survey suggested construction firms were seeing a "marked expansion" in new orders.

New contract wins led to an overall increase in employment, although Markit - the firm that carried out the survey - said that the rate of job creation "remained modest".

It added that house building activity had improved after slowing in April, although the rate of increase was below the long-term trend.

The month also saw a "considerable rise" in input prices, mainly in the form of higher raw material prices.

"Positive sentiment regarding future business activity rose to a one-year high, although concerns over public sector spending cuts continue to weigh on confidence," said Sarah Ledger at Markit.

On Wednesday, PMI data showed that the UK's manufacturing sector grew at its weakest pace in 20 months in May.

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