Bloomberg News

U.K. Construction Index Rose to 11-Month High in February

March 02, 2012

A measure of U.K. construction rose to the highest in 11 months in February on gains in new orders and commercial projects.

The gauge of building activity based on a survey of purchasing managers rose to 54.3 from 51.4 in January, Markit Economics Ltd. and the Chartered Institute of Purchasing and Supply said today in a report in London. A reading above 50 indicates expansion.

The report adds to signs Britain may have avoided sliding into another recession after the economy contracted in the fourth quarter. The groups’ manufacturing survey yesterday showed continued expansion. Bank of England Deputy Governor Charles Bean said this week the economy may strengthen, though it faces risks from the turmoil in Europe.

“The improved performance of the construction sector adds to other positive data released on the U.K.,” Sarah Bingham, an economist at Markit, said in the statement. “However, it remains to be seen whether GDP growth for the first quarter will be recorded and, if it is, any expansion is likely to be only modest as general economic conditions remain fragile.”

The groups’ measure for commercial construction showed the fastest increase in activity since September 2010, and their indexes for housing and civil engineering also showed gains. New business rose at the fastest pace in 21 months.

Fourth-Quarter Slump

A separate report showed construction orders fell 14 percent in the fourth quarter from the previous three months to the lowest level since 1980 as demand for government building work declined, the Office for National Statistics said today on its website.

The economy contracted 0.2 percent in the fourth quarter as business investment shrank. The purchasing manager surveys for services, manufacturing and construction all showed gains in January.

The Bank of England expanded its bond-purchase program by 50 billion pounds ($80 billion) last month to 325 billion pounds to support the economic recovery. Bean said this week he expects “gradual strengthening” of the U.K. economy, though the biggest risk is from “disorderly developments” in Europe.

“There have been a few positive signs, but I think it’s important not to read too much into one or two indicators rising to the upside,” Bean told lawmakers on Feb. 29. “It’ll take a lot more swallows to make a summer.”

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

To contact the editor responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net


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