-Tim Moore, Markit's senior economist
Activity in the British construction sector increased last month at the fastest pace since February, as job creation rose to its quickest pace so far this year. The Markit/CIPS construction PMI jumped to 58.1 in June, compared with 55.9 a month earlier. The data also showed confidence in the sector about the coming 12 months was at the highest level in 11 years. Residential house building remained the fastest growing area in the construction sector. The upbeat construction data contrasted with the Markit/CIPS PMI reading for the manufacturing sector, which showed growth declined to the slowest pace in more than two years in June. The manufacturing PMI reading declined to 51.4 in June from 51.9 in the previous month.
Meanwhile, a separate report showed UK house prices dropped between May and June, whereas analysts had expected a further rise. House prices in Britain declined by 0.2% in the reported period, which led to the annual price index decelerating to the lowest level in two years of 3.3%, down from 4.6% a month earlier, according to the mortgage provider Nationwide. The BoE has been closely monitoring the British housing market, arguing that the increasing burden of households' debt is one of the significant risks to financial stability once interest rates begin to climb. Economists expect UK house prices to continue increasing notably both in 2015 and 2016 after slowing last year.
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