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Barratt building boost - a sign of growth?

The gradual recovery of the house building industry in recent years has been a notable story on the construction news front, and last year saw the annual tally rise to 190,000, just 10,000 shy of the target set by the government in 2015.

With the housing crisis making headlines all the time and the issue high on the political agenda, the need to ensure enough homes are built is a pressing one and the government sought to show it was not being complacent about recent progress when it brought out a new white paper on the topic earlier this year. Indeed, communities secretary Sajid Javid said the target needed to grow to 250,000 a year - a figure that, among other things, would enable the Conservatives to achieve their pledge to build a million new homes by 2020.

That, of course, was to be the duration of the parliament, but with the snap election will come new pledges on housebuilding by all the parties.

Increases in housebuilding also spell good news for construction workers, as well as those employed in fitting shower waterproofing and home insulation. For them, the growth of workloads has been welcome, and they will hope the numbers of new homes being delivered continue to rise for these reasons, as well as the general need they and the rest of the public will appreciate.

The latest Barratt Homes figures have provided fresh evidence that housing construction remains on the up. The firm, one of Britain's biggest in the sector, has reported that during the period from January 1st to May 7th this year it started work on 46 new sites and is now active at 384 locations, up from 375 last year. Moreover, its tally of new home completions is the most headline-grabbing aspect. The firm said it is on course for the highest tally of completions in nine years.

Barratt chief executive David Thomas said: "Our controlled approach to growth means we are on track to deliver 17,350 completions in the year, the highest number of completions in nine years."

He added: "This has been another strong period both operationally and financially for the group. We remain firmly committed to delivering industry leading build quality and customer service, recognised by the award of the Home Builder Federation’s maximum five-star customer satisfaction rating for the eighth consecutive year."

For the company, Mr Thomas said the profit news would be good, at the "top of the range of current analyst estimates", from £675 million to £733 million. But the news will be encouraging for more than just Barratt's shareholders.  

The news comes at a time when the data about house building has been mixed. The monthly Purchasing Managers Index (PMI) published by Markit and the Chartered Institute of Procurement and Supply has in recent months shown that growth has been continuing in this segment, as well as in the construction industry as a whole. But there had been a notable slowdown in the early months of 2017.

However, April provided an upturn, both in the overall PMI - up from 52.2 to 53.1 - and in the specific fortunes of house building showed a particularly notable recovery, with the highest level of activity so far this year.

Observing this, Markit economist Tim Moore said the survey offered "more encouraging signs from the house building sector."

So with the overall housing construction outlook appearing more positive and one of the leading building firms at a nine-year completion high, the current situation looks increasingly positive.