-Tim Moore, Markit's senior economist
The British construction sector experienced the strongest growth in four months, led by increases in new orders and supported by easier credit conditions and a low interest rate environment. The Markit/CIPS UK construction PMI rose to 60.1 in February, compared with 59.1 a month earlier, marking the 22nd consecutive month above the 50-mark threshold. The housing, commercial and civil engineering sectors all showed signs of accelerating growth. In contrast, the official data showed output in the UK construction sector plummeted markedly in the December quarter, falling 2.1% and following a rise of 1.6% in the previous quarter. Yet, output in the sector, which accounts for 6.3% of the UK's total GDP, was 4.8% higher than in the same period in 2013.
In its February forecast, the BoE said it expected the UK growth in the fourth quarter to be revised slightly upward to 0.6%. Additionally, the central bank left 2015 economic output unchanged at 2.9%, but revised up 2016 growth to 2.9%, from the 2.6% estimated in its November forecast. The BoE also added that cheap oil should help boost real income and consumer spending. Meanwhile, the National Institute of Economic and Social Research predicts Q4 growth to have slowed to 0.5%, but the institute revised growth outlook for the whole of 2015 up to 2.9%, from the 2.5% it had forecasted last November.
© Dukascopy Bank SA