-Charlie Bean, Bank of England
Britain's construction PMI index faced its steepest downturn in seven years in July, suggesting that output in the construction industry dropped considerably, since the economy is at risk of recession after June's Brexit vote. According to the PMI survey, the Markit purchasing managers' index for the sector slipped to 45.9 during the last month, down slightly from June's reading and below 50, which indicates contraction. Economists, in turn had expected the index to reach around 43.8 mark in July.
This report follows Monday's survey which released a sharp downturn in factory activity. Today, or on Wednesday, the PMI survey for the services industry will be also published. However, there were also some positive points such as the fact that the negative numbers in construction output was little-changed from June's seven-year low. Moreover some reports showed that demand patterns had been more resilient than forecasted despite the gloomy business outlook.
Immediately after the release of the report, Pound strengthened notably. The GBP/USD was trading at 1.3215 from around 1.3197 ahead of the release of the data.
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