UK construction grows for second month, boosting recovery hopes - CIPS

LONDON Tue Jul 2, 2013 10:46am BST

A worker closes a door in a hoarding made to look like a theatre curtain, at a construction site in Covent Garden in London July 2, 2010. REUTERS/Luke MacGregor

A worker closes a door in a hoarding made to look like a theatre curtain, at a construction site in Covent Garden in London July 2, 2010.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - British construction grew for a second month in a row in June, cementing expectations that the economy picked up a bit of speed in the second quarter.

The Markit/CIPS construction Purchasing Managers Index edged up to 51.0 - its highest level since May 2012 - from 50.8 in May. The index was slightly below a forecast of 51.1 in a Reuters poll.

Residential construction, which has been the target of government incentives to boost economic growth, again drove the sector. Commercial construction and civil engineering stabilized after shrinking in recent months.

Growth in overall new orders reached its strongest level in just over a year, Markit said.

"The improvement in overall construction output simultaneously raises chances of strong second-quarter UK GDP growth, and reduces the likelihood of imminent additional policy stimulus from the Bank of England," said Tim Moore, senior economist at Markit. (Reporting by William Schomberg; editing by Ron Askew)

Construction was the biggest drag on Britain's gross domestic product between January and March when the country's economy grew by 0.3 percent.

Growth seems to have gathered a bit of speed in the April-June period to reach around 0.5 percent or slightly more, economists have said.

On Monday, a Markit/CIPS survey showed Britain's manufacturing sector grew at its fastest pace in more than two years in June.

The Bank, under new governor Mark Carney as of Monday, is not expected to resume bond-buying when it meets this week as policymakers weigh up how sustainable the recovery is likely to be, and Carney settles into his new job.

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