The Pound Sterling to Euro (GBP/EUR) exchange rate softened on Friday as data showed that UK construction output fell sharply in October and industrial output across the Eurozone continued to rise albeit at a weaker than forecast rate.
According to the London based Office for National Statistics British construction output fell by 2.2% in October, countering the 2.2% rise recorded in the preceding month. Year on year growth in the sector slowed to 0.7%, the weakest level seen since May 2013. Economists had been expecting a monthly rise of 0.7% and 1.3% on a year on year level.
‘Both new work and repair and maintenance decreased, by 1.7% and 3.1% respectively. In the new work category, only public other new work saw an increase; all repair and maintenance work categories experienced a fall in work in October,’ said the ONS report.
Construction makes up about 6% of Britain’s economy and the industry has grown robustly until recently, recovering from some of the hefty loss in output suffered after the financial crisis. The sector’s output is still around 7% below its pre-downturn level.
The data adds to signs that the UK economy is experiencing slowdown as weakness from the Eurozone and elsewhere drags upon the wider global economy. The data also matches last week’s Markit compiled Purchasing Managers survey, which showed that activity in the nation’s construction sector expanded at its slowest pace in more than a year last month.
‘Construction companies are grappling with myriad issues, including inflation-led cost overruns, a competitive bidding environment and labour constraints. The shortage of skilled workers is undermining current output levels and, unchecked, it threatens the long-term health of the sector,’ said Stefan Friedhoff from Lloyds Commercial Banking.
The Euro meanwhile received support from data released by the European Union’s Statistics Office, which showed that industrial production across the Eurozone increased more than expected on a yearly basis and improved on a monthly basis.
Production, on an annual basis, increased by 0.7% a better figure than the 0.6% forecast. On a month on month basis, production increased by 0.1%, below expectations for a rise of 0.2%.
The best performing Eurozone nation was Ireland as it saw a monthly increase of 9% and a massive rise of 38.8% on a yearly basis.
Pound Sterling to Euro Exchange Rates
The Pound to Euro Exchange Rate was trading in the region of 1.2634
The Pound to Euro Exchange Rate hit a session high of 1.2697
The Pound to Euro Exchange Rate hit a session low of 1.2624
