U.K. construction activity rebounds modestly in May

The U.K. construction activity saw modest rebound in May, showed latest PMI data. The seasonally adjusted IHS Markit Construction PMI index remained the same at 52.5. The figure suggested a moderate rise in total activity, although one that was subdued in the context of historical data. Some companies implied that unusually good weather conditions had underpinned activity and enabled them to continue catching up after prior months’ weather-related disruptions.

Residential work continued to be the strongest of the three monitored sub-sectors for the third straight month in May. The rate of growth dropped from April’s 11-month high, which had seen house building activity rebound from heavy snow in March. Both the commercial and civil engineering sectors remained in growth territory for the second straight month in May, with the former being the only category to record a more rapid rate of growth than in April.

New order books dropped back into decline in May. Panel respondents attributed this to political and economic uncertainty, subdued retail sector conditions and fragile business sentiment as key causes of weaker demand for construction projects. However, the pace of contraction was just marginal and slower than the declines seen throughout the first quarter.

Meanwhile, optimism towards future growth prospects eased to a seven-month low in May. The fall in sentiment was attributed to concerns of political and economic uncertainty and an expected slowdown in the construction sector.

Alongside, easing positive sentiment, job creation weakened to a four-month low in the latest survey period. Surveyed firms continued to report a shortage of skilled staff availability. Purchasing costs faced by construction companies rose sharply in May. The pace of input price inflation was the steepest recorded since February. Panel members commonly reported elevated fuel costs, alongside higher plastic and steel-related input prices.

At 16:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at -21.9443, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -18.9065. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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