Construction activity rebounds despite political uncertainty

Output in the UK construction sector unexpectedly rebounded in February, but the industry remained under pressure as weak confidence and political uncertainty took its toll on demand.

The Markit/CIPS UK Construction purchasing managers' index (PMI) hit 51.4 last month, up from January's four-month low of 50.2, with economists expecting a figure of 50.5.

A reading above 50 indicates growth.

While February proved a brighter month for the embattled sector, activity was still short of 2017's average 52.3 as the amount of new work hauled in by firms dropped for the second month in a row.

The update comes after the manufacturing industry drifted to an eight-month low in February, with a jump in new orders failing to counter a slowdown in production.

Sterling was marginally higher versus the US dollar at 1.378 in the wake of Friday's announcement. Versus the euro, the pound was flat at 1.122.

IHS Markit associate director Tim Moore said that "despite pockets of resilience" there was little to suggest that growth would pick up speed.

"The construction sector endured another difficult month during February, with fragile business confidence, entrenched political uncertainty and softer housing market conditions all factors keeping growth in the slow lane," he said.

"Residential work appears on track to experience its weakest quarter since Q3 2016, suggesting that house-building is losing its status as the main engine of construction growth.

"Civil engineering activity was the worst-performing category in February, with survey respondents again commenting on a shallow pool of work to replace projects reaching completion."

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