Britain's construction sector grew faster than expected in May and added jobs for the first time in nearly a year, offering a chink of light in what has become a generally sombre outlook for the UK economy.

Today's Markit/CIPS headline construction PMI index rose to 54.0 in May from 53.3 in April, beating forecasts for a reading of 53.6 and giving sterling a boost.

Economists said the figures suggested the sector grew in the second quarter and that it fared better between January and March than the 4 per cent decline reported by official data. Firms were also their most optimistic in a year about future activity.

However, government spending cuts and fragile house prices remain likely to drag on home building and large projects such as new schools, hospitals and infrastructure.

Britain's coalition government is cutting public spending by more than £80 billion over the next four years to try to eliminate a budget deficit running at close to 10 percent of GDP.

Markit said government cuts contributed to the first fall in civil engineering activity for five months.

Commercial building was the strongest of the three sub-sectors for a second month running, while house building grew in May after a contraction in April.

Construction companies saw a marked rise in new business as lengthy contract negotiations translated into new work, Markit said. That led to the first rise in employment in the sector since June 2010.

Purchasing of materials increased for a fifth consecutive month in May at a rate broadly in line with that seen in April, pointing to a further rise in activity.

Kingfisher, Europe's biggest home improvements retailer, said today it expected 2011 to be a tough year, particularly in Britain.

A manufacturing PMI survey published yesterday showed activity grew at its slowest pace in 20 months in May, highlighting the fragile state of the UK recovery.

A survey of Britain's dominant services sector is due to be released tomorrow.

Reuters