Brexit latest: Construction returns to growth in September
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Version 0 of 1. Britain's beleagured builders unexpectedly returned to growth in September, according to the latest survey snapshot of the construction industry. The Markit/CIPS Purchasing Managers' Index (PMI) jumped to 52.3 in the month, up from 49.2 in August and a seven-year low of 45.9 in the immediate wake of the 23 June Brexit referendum vote. Any PMI reading above 50 indicates expansion. City of London analysts had pencilled in a reading of just 49. The improvement was attributed to a recovery in residential building activity. Tim Moore of IHS Markit said that a number of respondents said Brexit-related anxierty had receded among clients. Around 45 per cent of the firms surveryed expected output to rise in the year ahead, while only 9 per cent ancitipated a decline. David Noble of the Chartered Institute of Procurement & Supply (CIPS) described construction as a "winner" in the month, although he stressed the pressures still ahead resulting from the Brexit process. The reading follows a much better than expected PMI manufacturing survey for September released yesterday. The services PMI for the survey will be released tomorrow. Another upside surprise there will further cement the view that the UK has easily avoided a return to recession in the third quarter of the year and will likely diminish expectations of another interest rate cut by the Bank of England at its meeting in November. The economy expanded by 0.7 per cent in the second quarter of 2016. A sharp deterioration of the PMI indicators immediately following the Brexit vote had prompted many analysts to forecast a return to recession for the UK. But the survey indicators have bounced back strongly in August and September and the modest amount of "hard" data from the Office for National Statistics covering the period since June has also been positive. The Bank of England is currently forecasting that the economy will have grown 0.3 per cent in the third quarter of the year. The latest data from the ONS suggests that construction output declined by 0.1 per cent in the second quarter of 2016, following an 0.8 per cent expansion in the first three months of the year. The sector accounts for around 6 per cent of GDP and according to the ONS output finally returned to its 2008 level earlier this year. The Chancellor, Philip Hammond, yesterday pledged an extra £2bn to facilitate construction on public sector land and more public sector investment in infrastructure is expected in the 23 November Autumn Statement. |