November 2, 2011 / 9:38 AM / 8 years ago

UK construction activity at 5-month high in October

A construction worker works on a building site in north London August 17, 2011. REUTERS/Suzanne Plunkett

LONDON (Reuters) - Construction activity picked up unexpectedly last month to a five-month high as firms took on new work and increased their workforce, but businesses were less optimistic about the future, a survey showed on Wednesday.

The Markit/CIPS construction PMI headline activity index jumped to 53.9 in October from 50.1 the previous month, smashing expectations for a dip to 50.0 and well above the highest forecast in a Reuters poll for 50.8.

The upbeat figures come after data on Tuesday showed that the manufacturing sector contracted at its fastest pace in over two years and ahead of a survey on Thursday expected to show growth in the service sector slowed.

Wednesday’s survey showed that although growth in new orders rose at its fastest pace since May, firms’ expectations for business over the coming year fell to its lowest in nearly three years.

“The outlook for the sector remains uncertain, with October seeing a further weakening in sentiment regarding business expectations,” said Markit economist Sarah Bingham.

“Furthermore, the increase in employment recorded was fractional, despite the rise in new business and activity. This suggests that constructors remain tentative about the longevity of the sector’s growth profile.”

The survey also showed that while activity in the commercial and civil engineering sectors improved, housing construction activity continue to fall.

Reporting by Jonathan Cable; editing by Anna Willard

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