UK Construction PMI jumps to 52.6 in February, a big beat - GBP/USD unfazed

The construction sector activity in the UK unexpectedly expanded last month, the latest survey report from Markit Economics showed this Tuesday.

The final Purchasing Managers' Index (PMI) came in at 52.6 in February, up from 48.4 recorded in January and beat the consensus estimates pointing to a reading of 48.8 by a big margin.

Key points

Housing and commercial work underpin rebound in activity.

New orders increase at fastest pace since December 2015.

Staffing levels close to stabilization in February.

Tim Moore, Economics Associate Director at IHS Markit, noted

“February's survey data adds to signs that the UK construction sector has started to rebound after a downturn through the second half of last year. Growth of business activity was stronger than at any time since the end of 2018, supported by the fastest rise in new orders for just over four years. Some construction firms suggested that the recovery in output would have been even stronger had there not been disruptions on site from severe weather conditions in February.”

"There were widespread reports that pent-up demand released since the general election had helped to boost workloads, especially in relation to house building and commercial construction projects. Civil engineering activity moved another step closer to stabilization in February. A number of survey respondents commented that contract awards from HS2 and other major transport projects had the potential to boost infrastructure work at their businesses in the year ahead.”

FX implications

The upbeat data fails to offer a fresh boost to the GBP bulls, as GBP/USD keeps the recovery mode intact around the 1.2775 region, having failed an uptick above the 1.28 handle.