• Home ::
• Fundamental ::
• Analysis Reports ::
• Top Fundamental Stories

• Send
• Print
• Add To
• Rss

Top Fundamental Stories

79a56e32-b435-471e-bff0-e03845adcd4b

2

0

Europe Ahead: United Kingdom construction sector eases contraction

Tue, Nov 3 2009, 07:23 GMT
by ecPulse.com analysis team

ecPulse.com

The second biggest economy in Europe today continues to reveal data that supports the fact that conditions are slightly improving, since the construction sector accounts for 6% of the GDP is expected to ease its economic contraction, this also hints that the housing sector is reaching its bottom.

PMI construction for October is estimated to ease the contraction to 47.2 from the previous month of 46.7. Although this sector is trying to recover, yet since the reading remains below 50 it is considered a contraction; while above 50 would be known as an expansion.

The construction sector gives us an overview of the housing sector because lately this sector has been under pressure from the worst housing slump in 25 years, led from the tightened credit conditions. Usually when a consumer wants to break ground, costs a lot of money to take that process, where with the current economic conditions it was difficult, due to the high unemployment rates.

The labor market in the UK remains fragile holding no recovery, as Britons continue to be laid off from their job as companies are facing eroded profits led from the lower production output, as a result of the dampened demand; which therefore forces them to reduce staff.

focus this week is set on the UK's interest rate decision, alongside the asset program, in which expectations reveal that the central bank will leave interest rates once again steady at 0.50%; the lowest since the bank's foundation in 1694, while from our point of view, the program should be expanded by at least an additional 25 billion pounds.

Presently, officials are using 175 billion pounds towards stabilizing the economy, and it has become clear to us that this program has been helping the nation prosper, especially since the housing sector has been showing improvement lately, following was the service sector which accounts for 75% of the GDP, which has been expanding lately.

Yesterday, we saw the manufacturing sector present a near 15% expantion after contracting, this further supports the fact that although the nation is in recession, it is fighting to step out of recession, while the worst financial crisis since the Great Depression is weighing on the outlook of the UK.

European stocks ended the session yesterday in the green zone; the DJ Euro Stoxx 50 climbed 19.45 points or 0.71% to 2762.95 points; CAC 40 gained 31.77 points or 0.88% to 3639.46 points; while the DAX inclined 15.86 points or 0.29% to 5430.82 points.

Published on  Tue, Nov 3 2009, 07:24 GMT