LONDON British construction activity eased slightly in September from a near six-year high in August, a survey of purchasing managers showed on Wednesday, but residential construction rose at its fastest rate in nearly a decade.
The Markit/CIPS construction purchasing managers index (PMI)edged down to 58.9 from 59.1 but was still well above the 50 threshold that separates growth from contraction.
Economists polled by Reuters had expected a reading of 59.2.
All three sub-sectors of construction grew last month, with the sharpest rise in housing since November 2003, potentially easing some concerns about Britain's shortfall of new homes.
"Construction is no longer the weakest link in the UK economy," said Tim Moore, senior economist at Markit.
"The third quarter of 2013 ended with output growth riding high amid greater spending on infrastructure projects and resurgent house building activity," he said.
Optimism was also up, with 51 percent expecting output would rise over the next 12 months and only 9 percent of respondents predicting a fall, the highest level of confidence since August 2010.
Employers created jobs for the fourth straight month.
"Having been in the doldrums for so long, builders are using this renewal as a platform to invest, with employment seeing the most dramatic upturn in close to six years," said David Noble, chief executive at the Chartered Institute of Purchasing & Supply.
PMI data on Tuesday showed Britain's manufacturing activity grew at a slower rate than expected in September, but also showed that employment picking up.
The Bank of England is keeping a close eye on the UK labour market, having said that it would not consider raising record-low interest rates until the jobless rate falls to 7 percent.
On Friday, mortgage lender Nationwide said British house prices rose for the fifth straight month in September and hit record highs in London.
The day before that, finance minister George Osborne asked the Bank of England to make annual assessments of his controversial "Help to Buy" housing programme to ensure that its support to lenders does not lead to a property bubble.
- Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.
To subscribe to the full data, click on the link below: http://www/markit.com/information/register/reuters-pmi-subscriptions
For further information, please phone Markit on +44 20 7260 2454 or email firstname.lastname@example.org
(Reporting By Joshua Franklin; Editing by William Schomberg and Hugh Lawson)