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UK construction sector builds on recovery talk

Sam Hodgson | Bloomberg | Getty Images

Activity in the U.K.'s construction industry grew at its fastest pace in six years in November according to data released on Tuesday, bolstering the U.K. government's claims of a robust recovery in the wider U.K. economy.

The U.K.'s manufacturing sector also picked up the pace in November, hitting its strongest level of output and employment since August 2007, according to data released by Markit.

According to the analysis firm, the country's construction purchasing manager's index (PMI) jumped to 62.6 in November from 59.4 in October, well above expectations made by economists polled by Reuters.

The boom was fuelled by house building hitting a 10-year peak as well as commercial construction and civil engineering also growing at fast rates, indicating that the growth was broad-based, according to Markit's chief economist.

"The data are encouraging in respect to the sustainability of the U.K. economic upturn." Markit's Chris Williamson told CNBC. "[They suggest] that recent developments have encouraged home builders to start more homes, boosting housing market supply to help meet buoyant demand, and that businesses are also feeling more confident to make investments in property and infrastructure."

(Read more: Carney warns of UK 'false dawn', overheating housing market)

Comments such as those will be a boon to the U.K. Finance Minister George Osborne as he prepares to deliver his annual "Autumn Statement" on the state of the U.K. economy later this week.

Osborne had been accused of orchestrating a housing boom in the U.K., introducing government schemes such as "Help to Buy" which have encouraged mortgage applications, leading in turn to a higher demand for homes and increases in house prices. The construction industry, meanwhile, had been accused of failing to keep up with demand, exacerbating fears of a "housing bubble."

The PMI data shows, however, that that the number of new housing starts has risen to 40-45,000 per quarter in recent months, up from 28,000 at the end of last year. By comparison, house building averaged just over 57,000 per quarter in the four years prior to the onset of the financial crisis, Williamson from Markit noted.

(Read more: Bank of England 'vigilant' on UK house prices)

Osborne is likely to seize on the latest piece of positive economic data when he delivers his "state of the economy" address on Thursday to show that his economic plan for the country is working.

In the third quarter of 2013, the U.K. economy grew 0.8 percent quarter on quarter, a positive boom when compared to the euro zone and European Union which grew 0.1 and 0.2 percent respectively in the same period. Indeed, market analysts said it looked "ever more possible" the U.K. could keep up such growth in the fourth quarter and beyond.

(Read more: UK acts to reduce housing bubble fears)

"Much will depend on how well consumer spending performs in the fourth quarter, as there have been signs that consumers have taken a breather after spending at a robust pace in the third quarter [but] if spending gains appreciable momentum as Christmas gets ever nearer, fourth-quarter growth prospects for the economy will be looking very bright," Howard Archer, chief European and U.K. economist at IHS Global insight said in a note on Tuesday following the results.

The latest batch of rosy numbers follows manufacturing data released on Monday which showed that new orders were at a 20 year high in November.

The data prompted the pound to hit a five-year high on a trade-weighted basket of currencies as investor expectations rose that the U.K.'s Bank of England could raise interest rates soon – and could even address such an option when the bank's policymakers meet this week.

(Read more: UK's economic growth picks up in third quarter)

"The U.K. economy [is in] full steam," Naeem Aslam, chief Market Analyst and head of Market Analysis Desk at Ava Trade, said in a note on Tuesday. "The jobs growth in the country is also becoming stronger, and odds are high that the unemployment rate may fall well before the Bank of England's projected time frame."

Reflecting on the latest PMI data, Aslam added to the throng of voices noting that the U.K. economy was "repeatedly exceeding market expectation."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt

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