Construction news better than expected
Today’s Markit/CIPS Purchasing Managers’ Index for construction provided mixed news about activity in the industry. Markit reported that “jobs continued to be cut at a marked rate” and opportunities for new contracts were limited as organisations continued to defer work. There was increased activity in commercial and civil engineering but a decline in house building; on the other hand, confidence about the future was the strongest for five months (though still “historically low”).
Yesterday I said that I expected construction to be weaker, but the overall index rose slightly, from 51.6 to 51.8. There was also an increase in the global manufacturing PMI, with improvements in China, Germany, France, India and the USA, which provides some grounds for optimism about the maintenance of the UK manufacturing recovery illustrated by yesterday’s very good UK manufacturing PMI figures. The Eurozone manufacturing PMI was a little more mixed, with contraction in Spain and Greece but more than outweighed by good performance in Germany and France; job creation in this index was at its highest for 40 months and in Germany there was a “near-survey record increase.” The Irish manufacturing PMI (a small element in the Eurozone picture, but an important trading partner for the UK) also rose. There is a worrying divergence between a Franco-German core and the Eurozone periphery, but the health of the UK’s main markets looks reassuring.
The big question remains: can this recovery be maintained in the face of what amounts to an internationally co-ordinated effort to stifle public sector demand?