UK construction companies indicated a further acceleration in output growth during February, driven by the fastest increase in new orders since October 2014, according to latest figures from the Markit/CIPS Construction Purchasing Managers Index (PMI).

Higher levels of activity were seen in all three sub-categories of construction work, with residential activity again seeing the steepest rate of growth. Strong demand for construction materials, alongside ongoing shortages of stock at suppliers, contributed a steep and accelerated rise in input prices. Furthermore, rates charged by sub-contractors increased at the most marked pace since the survey began in April 1997.

Adjusted for seasonal influences, the Index registered 60.1 in February, up from 59.1 in January and above the neutral 50.0 threshold for the twenty-second successive month. The latest reading picked up further from December’s recent low and signalled a sharp expansion of construction output that was the fastest since October 2014. Residential, commercial and civil engineering activity all increased at the steeper rates in February.

Participants in the survey generally attributed increasing output levels to strong workloads and rising spending patterns among clients. Construction companies mostly linked new business gains to improving economic conditions and positive sentiment towards the business outlook. However, some survey respondents said that uncertainties related to the outcome of the General Election had resulted in delays to spending decisions among clients.

Higher levels of business activity contributed to further job creation across the construction sector in February. Although still robust, the rate of employment growth moderated to its least marked since December 2013. Meanwhile, sub-contractor usage rose at an accelerated pace in February, which led to another steep reduction in the availability of sub-contractors. Strong demand for sub-contractors in turn helped push up average rates charged by sub-contractors, with the latest increase the fastest since the survey began almost 18 years ago.

More than half of the survey panel (51%) anticipate a rise in business activity over the next 12 months, while less than one-in-ten forecast a reduction (9%). This positive outlook was linked to robust pipelines of new work and favourable expectations for client spending over the year ahead.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: “The latest survey highlights renewed vitality within the UK construction sector, as output growth picked up further from the soft patch seen at the end of 2014. Housing, commercial and civil engineering activity all expanded at the quickest rates since last October, helped by sharp rises in new business volumes and an improving economic backdrop.”