Sterling and Britain’s blue chip stock index rose to a day’s high on Friday after a survey showed the downturn in the construction sector was easing, boosting expectations that the economy is holding up well after the Brexit vote.
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The figure was comfortably ahead of the 46.5 reading analysts expected and signalled the slowest pace of decline since the downturn began in June.
Anything above 50 signals growth, while anything below means a contraction in activity – so the higher the number is, the better things look for the UK.
Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: “The downturn in United Kingdom construction activity has eased considerably since July, primarily helped by a much slower decline in commercial building”.
Today’s data follows a surprisingly upbeat manufacturing PMI on Thursday, which showed that Britain’s factories recorded activity of 53.3 in August, the highest level in 10-months and a huge acceleration from July’s reading.
According to the report, manufacturers indicated that both domestic and global external markets had been sources of incoming new work and last month also saw new export orders expand at the quickest rate in one year.
The returning strength to industry also filtered through to employment, with staffing levels recording a small expansion in August. Survey compiler IHS Markit said that input price inflation surged to a five-year high, with nearly 44% of firms reporting an increase in purchasing costs.
He said there were still widespread reports that Brexit uncertainty was dampening demand, with total new order volumes continuing to fall in August.
Britain’s struggling construction sector largely recovered from its post-Brexit slump last month adding to hopes that European Union referendum uncertainty may be limited.
The move towards stabilization chimes with the more upbeat United Kingdom manufacturing PMI data for August, and provides hope that the near-term fallout from the “Brexit” uncertainty will prove less severe than feared, said Moore.
Activity in the United Kingdom construction sector moderated in August, according to data released on Friday.
The construction purchasing managers’ index (PMI), which is closely watched by policymakers at the Bank of England, hit 49.2 in August.
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This article was published on 2 Sep 2016 (last updated on 2 Sep 2016).
