UK building sector unexpectedly returned to growth in September

The UK building sector unexpectedly returned to growth in September 2016. Purchase Managers Index (PMI) rose from 49.2 points in August to 52.3 points in September. Any value over 50 talks about expansion, and below this limit – contraction in the sector. The results may raise questions whether the Bank of England will introduce more incentives to cope with the shock of the referendum Brexit since June. The index for construction rose more than 50 points for the first time since May and surprised the analysts.

The house construction is recovering and new orders increased and so broad measure rose to six-month high. However, it remains below the average of the last three years by about 60 points.

Unexpected recovery in construction follows the strong performance of the manufacturing sector. The data suggest that the UK economy is performing better than expected in the period after the Brexit referendum. The companies in the construction sector seem reasonably optimistic about the short-term prospects, as their confidence is associated with the rapid growth in new orders since March. However, the sector remains on the trajectory of much weaker growth than it was in early 2016.

The house construction and civil engineering expanded in September, but the construction business is shrinking the fourth consecutive month and recorded its longest series of declines since early 2013.

On Monday, authorities in London announced measures to stimulate the construction sector, which generates 6% of GDP. The UK government preparing stimulus package of 6.5 billion USD for housing.

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