UK construction reports unexpected monthly advance

UK construction expanded at the fastest pace in 21 months in March, adding to signs the economy returned to growth in the first quarter.

A gauge of building activity rose to 56.7 from 54.3 in February, Markit Economics Ltd. and the Chartered Institute of Purchasing and Supply said in a report today in London. The median forecast in a Bloomberg News survey of nine economists was 53.4. A reading above 50 indicates expansion. Markit said confidence at companies increased to a 22-month high.

The construction report follows a survey yesterday showing manufacturing grew at the fastest pace in 10 months in March. The British Chambers of Commerce said today Britain has probably avoided a second recession, though the government needs to do more to stoke a “weak” recovery.

“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,” said Chris Williamson, chief economist at Markit. “The particularly encouraging news is that the improvement in confidence is generating more jobs.”

The report showed that all three construction categories – housing, commercial and civil engineering – registered growth in March. Employment increased, which Markit said reflected growth in new orders and output at companies.