UK Construction PMI continues expansion in Nov, raises optimism for near-term outlook

The UK construction sector expanded further in November to hit an 8-month high. Business activity and new orders increased at the fastest pace since March and there was a sharp deterioration in supplier performance as supply issues continued. The Markit/CIPS purchasing managers’ index rose to 52.8 in November from 52.6 in October, beating forecasts for a reading of 52.2.

Housebuilding activity remained the best performing category of construction output during November, despite the pace of expansion slipping to a three-month low. Solid upturn in new work during November underpinned volumes of construction output.

Firms reported a steep and accelerated rise in their cost burdens in November, with the rate of inflation the fastest for just over five-and-a-half years. Job creation was maintained across the construction sector in November.

Upbeat data is likely to maintain optimism surrounding the near-term outlook, but is likely to have no immediate implications for monetary policy.

"This buoys hopes that the UK economy is continuing to hold up pretty well in the fourth quarter fourth quarter after resilient expansion of 0.5% quarter-on-quarter in the third quarter following June’s Brexit vote," said Howard Archer, chief UK and European economist at IHS Global Insight.

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