July 3, 2018 / 8:35 AM / 3 months ago

UK construction recovery extends into third month - PMI

LONDON (Reuters) - Britain’s construction industry put an early 2018 winter slump further behind it in June when the sector enjoyed its fastest growth in seven months, but companies remained worried about the outlook ahead of Brexit, a survey showed on Tuesday.

FILE PHOTO: A builder assembles scaffolding as he works on new homes, in south London June 3, 2014. REUTERS/Andrew Winning/File Photo

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) picked up to 53.1 from May’s 52.5.

It was the third month in a row that the sector grew after contracting in March and above the median forecast of 52.5 in a Reuters poll of economists.

New orders rose at the fastest pace since May 2017 and job creation was the fastest in a year.

FILE PHOTO: Construction work is seen on high-rise office blocks in the City of London in London, Britain, January 25, 2018. REUTERS/Toby Melville/File Photo

Business expectations also rose but remained below their levels of a year ago.

The Bank of England wants to be sure that the near-stagnation of Britain’s economy in early 2018 was only temporary, and not a reflection of broader worries about leaving the European Union in March 2019, before it resumes its plan to gradually raise interest rates.

Construction accounts for around 6 percent of British economic output.

The manufacturing sector, which represents about 10 percent of the economy, also picked up pace a bit in June, according to a PMI survey published on Monday.

A survey for the dominant services sector is due to be published on Wednesday.

Markit said growth in construction was driven by residential and commercial properties. But the downside of the increase in output was a longer lead time for getting supplies and the sharpest increase in input prices since September.

Writing by William Schomberg; Editing by Toby Chopra

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