U.K. Construction Resumes Growth Amid Resurgent Housing ActivityBy
PMI index unexpectedly rises to 52.3 in Sept. vs 49.2 in Aug.
Housing gauge jumps by the most in more than three years
The U.K. construction industry returned to growth in September as a measure of housing activity jumped the most since 2013.
IHS Markit said on Tuesday that its Purchasing Managers Index jumped to 52.3 from 49.2 in August. It was the highest level in six months and ended a three-month run of readings below 50, the threshold that divides expansion from contraction.
The figures add to evidence that the economy is performing better than many predicted following the June decision to leave the European Union. Traders increasingly expect the Bank of England to refrain from adding to its August stimulus package this year.
“A number of survey respondents noted that Brexit-related anxiety has receded among clients,” Tim Moore, an economist at IHS Markit, said in the report. “Construction firms appear reasonably optimistic about the near-term outlook. However, the sector remains on a much weaker growth trajectory than seen at the start of 2016, which contrasts with the export-led surge in manufacturing production during September.”
An index of housing activity jumped the most in more than three years in September, with measures of commercial and civil engineering work also showing improvements. New construction orders returned to growth for the first time since April amid improving domestic conditions. Still, the overall activity gauge was below a long-run average of 54.6.
Markit’s indexes for construction and manufacturing had been expected by economists to decline. Instead they rose, with factories having their best month in more than two years in September. Markit will publish its index of services, the largest part of the economy, on Wednesday. It’s forecast to slip to 52.2 from 52.9 in August.
Concern that Britain is heading for a so-called hard Brexit kept the pound under pressure on Tuesday. It was at $1.2753 as of 10:22 a.m. London time, down 0.7 percent on the day. Sterling has lost more than 14 percent since the referendum. While that’s provided a boost for exporters, it’s also fueling inflation by pushing up the cost of imports.