Business activity in the UK construction sector accelerated in December at the fastest pace in nine months, supported by housing building. The weakness of the British currency, however, caused the sharpest increase in costs over the past five years.
The Purchasing Managers’ Index (PMI), calculated by the private company Markit, rose from 52.8 points in November to 54.2 points in December. This is the highest value since March this year and far above expectations. The economists had expected the cost to maintain the same.
This came as suppliers passed on the higher costs of imported raw materials. The sharp fall in the value of the pound following last year’s Brexit vote has made imported goods more expensive.
Along with the strong performance in industry, the suggest that the UK economy is gaining momentum at the end of the year. However, the overall picture will become clear, when the services data is released on Thursday. The report shows that the UK is facing a serious challenge due to weak currency, which fell after the referendum Brexit.
The construction costs rose last month at a pace not seen since April 2011, while companies reported shortages of materials, probably due to additional demand as companies prepare for further price increases.
Housebuilding remains a key engine of growth for the construction sector, with the latest upturn the fastest for almost one year. Meanwhile, commercial activity was the weakest performing category in December, reflecting an ongoing drag from subdued investment spending and heightened economic uncertainty.
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