U.K. Construction Index Jumps Most Since 2013 in Brexit ReboundBy
PMI survey shows building activity shrank at a slower rate
Housing, commercial and engineering work posted improvements
A U.K. construction index surged in August from a seven-year low as the building industry showed signs of stabilizing following the shock inflicted by the Brexit vote.
Markit Economics said its Purchasing Managers Index jumped to 49.2 from 45.9 in July, the biggest monthly gain since November 2013. That beat the median estimate of economists in a Bloomberg News survey for a rise to 46.3 and leaves the index just below the 50 reading that divides expansion from contraction.
The data add to evidence that the economy is weathering the decision to leave the European Union and may fuel speculation the Bank of England will refrain from adding to its August stimulus package in coming months.
“The latest survey indicates only a partial move towards stabilization, rather than a return to business as usual across the construction sector,” Tim Moore, an economist at Markit, said in the report. “There were still widespread reports that Brexit uncertainty had dampened demand and slowed progress on planned developments.”
The pound was at $1.3280 as of 10:22 a.m. London time, up 0.1 percent on the day. The currency has lost almost 11 percent against the dollar since the June 23 referendum.
Markit’s U.K. manufacturing survey on Thursday showed factory activity rebounded to a 10-month high in August as the weaker pound boosted exports. Friday’s construction survey showed all sectors -- housing, commercial and civil engineering -- posted improvements in August.
A number of companies noted demand had been more resilient than expected and there were some signs of a rebound in client confidence, Markit said. Input costs rose at their fastest pace since July 2011 as a weaker pound pushed up import prices, it said.
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