Growth in the UK construction sector soared in November, despite a steep increase in costs due to the weakness of the pound.
The Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) figure rose to 52.8 in November, up from 52.6 last month. It was several points ahead of the 52.2 reading forecast by Reuters analysts.
However, costs rose at their fastest pace since 2011, as the effect of weaker sterling in the wake of the June begins to have an effect. Tim Moore, a senior economist at Markit, said:
“UK construction companies experienced a steady recovery in business activity during November, which continues the rebound from the downturn seen over the third quarter of 2016.”
Thus far the British economy has performed better than expected in the wake of Britain’s decision to leave the European Union – however, it is likely the real test will come after the triggering of Article 50, which Prime Minister Theresa May has indicated will be early in 2017. Construction firms appeared to be undeterred by the potential economic uncertainty, increasing their pace of hiring for the fourth month in a row.
House builder Berkeley Group reported a 20 percent drop in demand for houses over the last six months, despite their 24 percent rise in pre-tax profit to £393 million for the first half. Chief Executive Rob Perrins said the group was in a strong position to tackle uncertainty from the European referendum, but urged the government to clarify their position on Brexit as soon as possible.
On Thursday Markit released figures for the manufacturing sector, which slipped to a four-month low of 53.4 in November. The biggest indicator, a gauge of services, is due to be published on Monday.