Markit, a market research group, reported on Tuesday that activity in the British construction sector improved slightly in the past month, but still remained lower than 50, showing the industry contraction for the second month in a row. The industry managers survey showed that the Markit/CIPS construction PMI increased to 49.5 from a previous month reading of 49.0. Analysts, however, expected a stronger improvement in the sector, with PMI reaching the level of 50.1. The index remained at its lowest since 2008, despite efforts of the government to stimulate activity in the sector by guarantying loans to build rented houses and a BoE scheme that lowers borrowing costs.
"The principal take out from September's PMI survey is that underlying construction weakness is likely to continue for the remainder of 2012," said the Markit senior economist, Tim Moore.