According to data published by IHS Markit, the expansion of the UK’s construction sector slowed in August, with the latest PMI reading slumping from 55.8 to 52.9, falling well below the modest slide to 55 that had been forecast by economists.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “Cracks in the construction sector’s masonry were beginning to show again this month, and the house building sub-sector was hit the hardest as it reported the poorest performance since March this year.”
The fall indicates that the burst of growth seen in July is likely to have been a one off as firms caught up on work delayed by the adverse weather seen at the start of the year, with Brexit uncertainty likely to continue to hamper growth for the foreseeable future.
However there were still some positive signs from the sector, with construction firms reportedly continuing to recruit staff at a robust pace, with many respondents appearing confident that business will continue to grow over the coming months.
Meanwhile the euro is struggling to find any gains this morning as it faces pressure from a robust US dollar.
The large volume of trade in euro US dollar sees the euro currently on the back foot as the US dollar is bolstered by ongoing trade tensions between the US and China as well as concerns about possible economic fallout from the financial chaos unfolding in Argentina and Turkey.
Looking ahead, the pound euro exchange rate may see some further movement this afternoon as Bank of England (BoE) Governor Mark Carney appears before the UK’s Treasury committee.
Mr Carney is expected to justify the BoE’s decision to raise interest rates in August as well as providing an update on the current state of inflation, with an upbeat outlook from the bank potentially strengthening the pound.
Markets will also be looking for any hints regarding Mr Carney’s future at the BoE, with Sterling in all probability strengthening if he indicates that he will stay as Governor past June, as some rumours suggest.
Meanwhile we are likely to see a dip in the euro on Wednesday as the Eurozone publishes its latest retail sales report, with analysts forecasting that sales growth will have contracted by 0.2 per cent in July.