"Construction growth is still coming from a low base as output levels rebound from a deep and protracted double-dip recession that only really ended this summer."
- Tim Moore, senior economist at Markit and author of the UK Construction PMI
The Pound has climbed to the recent high at 1.6436 on Tuesday; however, was not able to inch any higher, even as activity in the construction sector rose at the fastest since August 2007 in November. A monthly report from Markit showed that the U.K. construction PMI rocketed to 62.6 from 59.4 in October, strongly outpacing market's prediction of a 59.0 reading. Additionally, higher level of new projects positively affected the labour market, leading to sharp rises in employment and purchasing activity.
After lagging behind other sectors of the economy the construction sector has finally joined a broad-based recovery, pointing at accelerated expansion of house building activity over the corresponding period. The activity in the sector, which accounts for about 6.3% of total GDP has accelerated in the final three months of 2014. Moreover, sustained gains in residential building and improved infrastructure are contributing to growth and are likely to provide additional boost in the coming months.
Construction sector is often used by analysts as an aid to economic interpretation and forecasting, as it provided the biggest boost to the economy in the third quarter. Together with stronger activity in other pillars of the economy, the U.K. is likely to accelerate even further in the final quarter of 2013.
© Dukascopy Bank SA