Yesterday’s better-than-forecast UK manufacturing PMI allowed the Pound to gain on its peers, and the British currency is likely to record additional gains in the hours ahead as another piece of domestic data exceeded expectations.
The Pound Sterling Exchange Rate was in the region of 1.5316 against the US Dollar as of 10:05 GMT
Economists expected a gauge of construction compiled by Markit and the Chartered Institute of Purchasing and Supply to show that the sector contracted in May, although at a slower pace than in the previous month. The index was forecast to rise from 49.4 to 49.8, leaving it below the 50 mark separating growth from contraction.
However, the index actually climbed to 50.8 last month, marking a welcome return to growth.
This is the first time UK construction output has risen since October 2012.
The report also detailed the fastest paced increase in residential building work for more than two years, and showed an increase in confidence among construction firms.
However, the data wasn’t all positive. The rate of new order growth remained weak, employment levels were largely unchanged across the sector and average input costs increased for the fortieth consecutive month.
In a statement accompanying the figures Markit Senior Economist Tim Moore asserted: ‘UK construction output appears to have finally pulled out of a tailspin in May, but the latest figures suggest that the sector is worryingly reliant on residential building work for thrust. Construction firms cited improving house building activity as the key factor behind a rise in new orders for the first time since May 2012. Meanwhile, shrinking spending on both commercial and civil engineering projects acted as a drag on overall new business growth.’
Moore continued: ‘While the latest survey provides some hope that rising construction output will support UK GDP in the second quarter, the sector remains unlikely to contribute positively to labour market conditions. May data indicated stagnant employment levels at construction firms, with survey respondents noting that cautious job hiring polices persisted across the sector in spite of a slight improvement in output volumes.’
Similarly, David Noble of CIPS observed: ‘The construction sector seems to have turned a corner after six dismal months. The improvement has been fuelled by a boon in house building, but the sector remains bogged down by contractions in commercial construction and civil engineering. Whilst confidence for the year ahead remains high, the poor performance of suppliers and flat levels of employment will serve as a reality check to construction and the wider UK economy.’
Earlier today data provided by the British Retail Consortium showed that a gauge of UK retail sales increased by 1.8 per cent year-on-year.
After the PMI report was published the Pound broadly strengthened, pushing back above 1.53 against the US Dollar.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5316 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1696 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.5819 >
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9054 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6535 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8552 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6325 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5244 <
(As of 10:05 GMT)
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