'New Dawn Breaking' for UK Construction Firms as August Output Soars

August saw the sharpest expansion in output from the UK's resurgent construction sector in almost six years, according to a private industry survey.

Markit's purchasing managers index (PMI) for construction hit 59.1 in August, up from July's 57 amid the fastest pace of output growth since September 2007. It is the fourth consecutive month of expansion.

Any reading above the neutral 50 mark signifies expansion of activity in the sector. The index is compiled from surveys of construction industry purchasing managers.

"A new dawn is breaking in construction. The industry recorded the fastest pace of growth since 2007 in August, leaving the dark days of recession behind," said David Noble, chief executive at the Chartered Institute of Purchasing & Supply, which compiles the monthly UK PMI reports along with Markit.

"Builders have seen a step change in recent months and are now starting to show their true potential to the UK economy."

Noble added: "This new direction brings new challenges, not least the prospect of additional work and insufficient capacity to meet demand. How the sector navigates these tensions and manages the supply chain could come to define its performance over the coming months."

Construction firms took a serious knock from the government's spending cuts as contracts with public bodies dried up. Moreover, the gloomy domestic economy weighed on demand for construction and maintenance work. Output in the sector plunged 8.4% in 2012 on the year before.

Housebuilders have been boosted by mortgage easing schemes, including Funding for Lending and Help to Buy, which has pushed up demand in the housing market and so inflated prices.

Persimmon, the UK's largest housebuilder, reported a 38% rise in half-year profits in the opening six months of 2013, while Bovis Homes said its housing business saw a 50% profit spike over the same period.

As well as the lift from credit easing schemes, builders will also get a leg up from the healing British economy. UK GDP growth accelerated from 0.3% to 0.7% across the first to second quarter. Early data from the third quarter suggest the pace of expansion has quickened again.

Markit's PMI report for the UK manufacturing sector noted that factories are "booming again" after output and news orders rose to 19-year highs during August.