The UK construction sector has continued its impressive expansion but the latest Markit report warns of rising costs and adequately trained workers The UK construction industry took on a record number of staff in June as activity in the sector continued to boom, according to PMI data. However, the report warns that subcontractor pay rates have also risen at a survey record pace in recent months as skill shortages reached all-time highs. The Markit/CIPS Construction PMI rose from 60.0 in May to 62.6 in June, signalling a rate of increase in building activity that has rarely been beaten since survey data were first collected in 1997. Revised upwards The recent PMI reading is seen as indicative of the construction sector growing at a quarterly rate of 3% or more in the second quarter, although it notes that official data have indicated a far less buoyant picture of the sector than the PMI survey. Nevertheless, the strength of the survey indicates that there may be scope for further upward revisions to recent official data. Construction sector growth for the first quarter, for example, has already been revised up five-fold from an initial estimate of 0.3% to 1.5%. Commercial construction activity, house building and civil engineering all rose sharply again in June, albeit with the pace of growth of the latter easing to a nine-month low. But growth of commercial activity and house building accelerated, reflecting increased business investment in property such as offices, industrial units and retail space, as well as a surge in residential construction. The construction survey has showed the fastest pace in hiring in the sector since 1997. “This represents a remarkable yardstick of progress as the sector looks to recover the ground lost over the past seven years,” explained Tim Moore, the survey’s author. Home building was the fastest growing sector, with the biggest pick-up in activity since January as rapidly rising house prices, low interest rates and strong demand, encouraged developers to press ahead with projects. The UK construction industry is recovering well but may be heading into trouble with a skills shortage, according to the latest Markit/CIPS report.