January data indicated that UK construction companies started the year with an acceleration of output growth at their units, boosted by sharp rises in incoming new work. Stronger demand resulted in a marked increase in employment numbers across the construction sector as well as improved confidence about the business outlook during 2014.

Adjusted for seasonal factors, the Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered 64.6 in January, up from 62.1 in December and above the neutral 50.0 value for the ninth successive month. Moreover, the latest index reading pointed to the sharpest overall expansion ofUKconstruction activity since August 2007.

Output growth at the start of 2014 reflected rising levels of activity across all three broad areas of construction monitored by the survey. Residential construction remained the best performing sub-category, with the latest expansion of housing activity the steepest since November 2003. Meanwhile, commercial building work and civil engineering activity both increased sharply during January, and in each case the latest expansion was the steepest since the summer of 2007.

Confidence about the year-ahead outlook was the most positive since September 2009, which in turn supported job hiring in January. Higher levels of employment have now been recorded in the construction sector for eight consecutive months, which is the longest continuous period of job creation since early 2008. Higher levels of business activity meanwhile boosted input buying across the construction sector in January. The latest expansion of purchasing activity was the steepest since August 2007.