"The improvement in overall construction output simultaneously raises chances of strong second-quarter UK GDP growth, and reduces the likelihood of imminent additional policy stimulus from the Bank of England"
- Tim Moore, senior economist at Markit
The flow of upbeat second quarter activity data from the U.K. continued on Tuesday with the release of fresh report from Markit showing construction activity improved for a second consecutive month in June, cementing expectations that the recovery is gaining momentum. The Purchasing Managers Index of an activity in the construction sector rose to 51.0 last month, up from 50.8 in the preceding month, however, below analysts' expectations of a 51.3 reading. The construction sector has been a drag on the economic growth, and another expansion in June was the highest reading since May 2012. Moreover, the sector registered a solid new orders growth, which should support activity in the upcoming months.
The major boost for the growth was received from an increase in the level of private housebuilding. The total number of project starts saw a 1.6% annual rise for the three months to June, leading to 12.3% increase in private housing starts. Nevertheless, the social housing sector continues to struggle with project starts, falling 3% in June from the same month a year earlier. Based on recent statistics, analysts expect the economy to accelerate up to 0.5% in the second quarter of this year, up from a 0.3% growth recorded at the beginning of 2013.
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