- Tim Moore, senior economist at Markit
Britain construction sector activity remained firmly in the expansion territory, coming in at 62.4 in July year-on-year, fuelling optimism over the nation's economic prospects. Although the data showed that the U.K. construction activity, which accounts for 6.3% of total gross domestic product, declined compared to the June's reading of 62.6, it overshot economists' expectations for a 62.1 reading. Housing activity remained by far the best performing construction category, with the U.K. homebuilding rising to the highest level since November 2003. Meanwhile, sharp increases in overall construction activity led to a new survey-record pace of job creation and a further rapid lengthening of suppliers' delivery times in July. Before the data, GBP/USD remained quiet to trade at 1.6820. After the release of the data, the Pound strengthened versus the U.S. Dollar, with GBP/USD easing up 0.04% to trade as high as 1.6829, compared to 1.6820 ahead of the data. This reaction is considered to be relatively muted.
Overall, Markit's PMIs in all three sectors (namely, construction, manufacturing and services) have been slowing down since the end of 2013, although the pace of total growth kept its momentum at 0.8% in the second quarter. Economists predict growth to roll on at a similar pace into the third quarter, but should then decline towards the end of the year.
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