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Expectations High for UK Construction PMI

H.S. Borji
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Expectations High for UK Construction PMI

UK construction activity probably remained elevated in March, according to a broad consensus of market analysts eyeing Wednesday’s PMI data.

Markit Group is scheduled to report on UK construction activity Wednesday. The monthly reading is expected to narrowly top February’s high of 62.6, according to economists polled by Reuters.

The UK construction sector hit a six-and-a-half year high in January, led by the sharpest expansion in housing activity in more than ten years. The UK’s housing sector, which has been supported by government lending schemes, has been at the heart of the economy’s resilient recovery over the past year. The UK economy in 2013 had its best year of growth since the financial crisis, driven largely by real estate and consumer spending.

February marked the tenth consecutive month the UK construction sector was in expansion mode, according to Markit.

The British pound, which came under pressure following a disappointing manufacturing report, continued to slide in the North American session. Sterling is likely to respond sharply Wednesday should the construction figures diverge from the consensus in any significant way.

As of Tuesday’s afternoon session, the pound was trading lower versus the euro and US dollar. The EURGBP pair was up more than 0.3 percent to 0.8291. The GBPUSD pair recovered from a daily low of 1.6620 to consolidate at 1.6643, a loss of more than 0.1 percent.

Markit reported today UK manufacturing activity unexpectedly slowed in March, with the headline PMI reading falling 0.9 percentage points to 55.3. The PMI reading, which hit a 33-month high of 58.1 in November, is well above the long-run average of 51.4.

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