LONDON, Nov 2 (Reuters) - - British construction activity unexpectedly grew a little last month, a survey showed on Thursday, but confidence among firms in the sector dropped to the lowest level in nearly five years.
While the IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) recovered to 50.8 from 48.1 in September - just above the 50 mark that signifies growth - that still marked the second-weakest reading since July 2016.
A Reuters poll of economists had pointed to an unchanged reading for the sector, which accounts for about 6 percent of overall British economic output. Official data has shown construction output shrank in the second and third quarters of 2017, so the weak PMI is unlikely to alter the thinking of Bank of England officials who are widely expected to announce an interest rate hike at 1200 GMT.
But details from the PMI - historically a decent guide to economic growth - will largely bolster the view of a majority of analysts who think raising borrowing costs now would be a mistake.
Despite a tiny recovery in new orders last month, construction firms’ confidence about business prospects for the next 12 months dropped to the lowest level since December 2012, around the last time Britain flirted with recession.
Survey compiler IHS Markit said there was anecdotal evidence that the gloom related specifically to concerns about Britain’s economic outlook.
“Greater house building was the sole bright spot in an otherwise difficult month for the construction sector,” said Tim Moore, associate director at IHS Markit. “Reduced tender opportunities and fragile demand are placing a dark cloud over the near-term outlook.”
Reporting by Andy Bruce; Editing by Hugh Lawson; email@example.com; +442075423484; Reuters; Messaging: firstname.lastname@example.org