UK construction at 6-1/2 year high in January

British construction activity unexpectedly picked up more speed in January, with growth reaching its highest level since the financial crisis, a survey of purchasing managers showed on Tuesday.

The Markit/CIPS construction PMI rose to 64.6 in January from December's reading of 62.1, the sharpest expansion in UK construction activity since August 2007, when the financial crisis first started to take hold in Britain.

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The number far exceeded economists' forecasts in a Reuters poll for a reading of 61.5, and was well above the 50 mark that separates growth from contraction.

"January's survey provides reassurance that the UK construction recovery remains on track," said Tim Moore, senior economist with Markit, which compiles the data.

The building industry was hammered by the financial crisis of 2007-09. The pick-up in construction comes as Britain's housing market has been boosted by falling unemployment, low interest rates and government programmes.

Growth in house-building quickened at the fastest pace since November 2003, the data showed.

'Best prolonged period of growth' for UK: Markit

The number of new and existing homes coming onto the market is lagging demand, however, putting upward pressure on housing prices.

Markit said commercial building work and civil engineering activity increased in January to the fastest rate since mid-2007. It said stronger demand for construction materials was putting pressure on supply.

"While input cost inflation eased in January, there were again signs that some suppliers are struggling to adjust to greater demand for construction materials," Moore added.

On Monday, a similar survey showed the swift upturn in British factory activity eased slightly in January.

Construction accounts for less than 7 percent of Britain's economy.

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