- Tim Moore, senior economist at Markit
On Monday the cable moved lower 0.04% following the release of the manufacturing PMI figure. Keeping in mind that construction sector accounts only for 7% of overall Britain's GDP and just 5% of employment, the fact the cable was unshaken by a drop in construction sector was not a surprise.
Another report from Markit showed the nation's construction sector cooled further in May; however, there were emerging signs the sector was struggling to keep up with extremely strong demand. A gauge of activity fell to 60.0 last month, hitting its lowest level in seven months and decelerating from 60.8 a month earlier. Analysts expected a reading 61.2 given the fact the economy gains momentum following winter's slowdown. Despite falling from its 76-month peak seen in January, the sector still maintains strong momentum, mostly driven by a revival in the housing market, stronger business confidence as well as brighter outlook for the domestic economy. According to official statistics, construction sector lost some momentum in the first quarter, as harsh winter affected the performance, even though the output climbed 0.6%, compared a 0.2% decline three months earlier. Everything speaks in favour of stronger activity in the coming months, however, we should not forget about the lack of new housing, as homes are unable to catch up with stronger demand property.
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