Sterling falls against the dollar after weak UK construction PMI data, falling to a session low of 1.5373 from 1.5403.
The Purchasing Manager’s index is a leading indicator of economic health and a reading above 50.0 indicates industry expansion. While the data is above the 50 mark, the index fell to a ten-month low in September, adding weight to expectations the Bank of England may have to resort to further quantitative easing in the near term to boost the economy.
The “Markit/CIPS” construction PMI headline activity index fell to 50.1 despite economists’ expectations of it to drop to 5105 from August’s 52.6 level.
A break- down of the report indicates construction activity in the UK stagnated in September after contraction in the home-building and civil engineering sectors. The housing industry is still struggling in contrast to the manufacturing sector which data showed yesterday it grew in September as the index showed a jump to 49.4 to 51.1.
“Markit” economist Sarah Bingham said “Activity growth slowed to near-stagnation, with constructors relying on work on existing contracts to support output. This therefore bodes ill for construction activity in the coming months.”
“UK construction companies continued to struggle in the face of growing concerns about the wider economy, with weaker client confidence leading to a reduction in new business received during September,” she added.