Construction activity (Purchasing &Supply) fuels UK economic growth

Construction PMI in UK is printed positively at 55.9 which is a way beyond forecast at 55.1. We expect this positive number has to boost the economic growth.

As a result, the pound climbed up against the US dollar on Tuesday which was boosted by upbeat UK construction activity, while demand for the greenback slightly weakened as market participants were booking profits from its recent rally.

Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction purchasing managers' index rose to 55.9 last month from a reading of 54.2 in April.

And in addition to that net lending to individuals MoM is also printed at 2.9 bln, again beyond the forecast at 2.3 bln.

Today's major domestic release will be the services PMI for May. In April the highest level in 8 months reached at 59.5, with service sector output expanding by a lukewarm 0.4% in Q1. The forecast is at 59.2 for this release.

With the PMI business expectations balance which historically has had a closer mapping to GDP easing a little to below its long term average, we expect for some pullback in the data for May with the headline balance dipping to 59.0.