By Daniel Hunter

March data signalled a marked expansion of UK construction sector output, with the rate of growth accelerating for a second successive survey period.

A rise in new work intakes supported the latest increase in activity, and also a modest pace of job creation. Meanwhile, confidence continued to strengthen.

The seasonally adjusted Markit/CIPS Construction Purchasing Managers’ Index (PMI) posted 56.7 in March, up from 54.3 in February. The index has now posted above the 50.0 no-change level that separates growth from contraction in each month since January 2011. Moreover, the latest reading pointed to the sharpest expansion of output in 21 months.

“The good weather appears to have led to a surge in demand for construction projects in March, adding to the recent flow of good news which suggests the economy will have skirted a recession," Chris Williamson, Chief Economist at Markit said.

“Construction companies reported the largest monthly rise in new orders for four-and-a-half years, driving building activity higher at the fastest rate since mid-2010. Coupled with increasing activity recorded in the first two months of the year, this bodes well for the sector’s contribution to overall growth of the economy in the first quarter and will raise hopes that the country has avoided a slide back into recession.

“Looking ahead, the lack of big new projects such as Cross rail and the Olympics means expectations about the year ahead continued to run well below the pre-crisis peaks, but business confidence nevertheless reached the highest for nearly two years, driven up by expectations of increases in new order intakes and improving client optimism.

“The particularly encouraging news is that the improvement in confidence is generating more jobs, with employment rising modestly.”

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