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Regional construction leader says area is still behind South
THE UK's service industry has grown at its fastest pace for more than six years in August, but there is still a vast North and South divide in the construction sector, a North-East building leader has said.
The Markit/CIPS Services Purchasing Managers' Index (PMI), says companies from restaurants to law firms saw new business increase at its sharpest rate for 16 years, with activity at its highest since December 2006.
It revealed the service sector's rating rose to 60.5 in August, with any reading above 50 indicating growth.
The results come after the industry body said the UK's factories are booming again, with orders at their highest for nearly 20 years, and claimed the building trade is experiencing its highest growth in work for six years.
However, a North-East construction leader says the building figures, which say output has risen at its fastest pace since September 2007 and residential work increased at its highest rate for more than three years, don't reflect the region's true picture.
Douglas Kell, director of the Civil Engineering Contractors Association (North-East), said the report was skewed in favour of the South, after contracts were handed out for the London 2012 Olympic and Paralympic Games and the city's Crossrail rail development.
He said: “The picture nationally is quite different from that of the North-East.
“The national situation will include knock-on benefit in London and the South from the Olympics and massive rail developments, whereas here we are still waiting for Government investment that has been promised, but not until 2015.
“The situation in our region is not as horrendous as before, things have bottomed out, but not at the rate we hoped. “Hopefully things will turn around, but the mood of this report cannot be said to match the situation here.”
But Paul Smith, Markit senior economist, said the results, including the service sector, proved the UK was beginning to grow again.
He said: “The sector's recovery, which has been evident since the start of the year, has legs.
“With sister surveys for construction and manufacturing also signalling the continuation of substantial growth, the UK is well on course to register a strengthening of GDP growth over the third quarter.
“If activity and sales can maintain their current growth, then higher payrolls and increased wages should follow.”
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