Construction Recovery as Pound Hits Back

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Construction Recovery Provides Hope

The United Kingdom’s construction industry has bounced back slightly after the epic fall of Brexit. The August recovery shows that the aftermath of Britain’s departure from the European Union may not be as doom and gloom as many people feared. The end of the month saw the currency increase to its highest values of the previous four week period when compared to the dollar. The reason for the rise is due to the release of the UK’s construction data which was higher than most experts predicted. The Construction recovery could be an indicator for the rest of the UK economy which experts believe could now fully recover and then improve.

PMI Surges

The purchasing manager’s index is the main reason for the improvement. The PMI indicates the growth or contraction of the sector. July’s figure was 45.9; a figure below 50 indicates contraction, which had fallen due to the uncertainty surrounding the outcome of the Brexit vote. Now that the dust has settled the PMI has increased to 49.2. It is important to note that this is still a contraction but it is a significantly smaller contraction than July. House building and commercial activity sectors have both seen a rise in their sub sectors as companies decide to press on with their plans. However, the industry reports that whilst companies are continuing with smaller, less economy dependent projects, the bigger economy boosters have been delayed.

Winners and losers

The weaker pound has helped some construction sectors but damaged others. The weaker pound means that importing and buying materials needed for big projects has become more expensive. This is why large companies are waiting for the pound to recover. However companies that sell building materials are now able to sell their products at higher prices despite the majority of their stock having been bought before the pound plummeted. If the pound continues to recover at the current rate then they could benefit tremendously from this scenario. 7