U.K. construction PMI likely to have risen further in September

Housing construction in the U.K. suffered greatly in June and then slowly began improving in the following two months as shown by the breakdown of the construction PMI. Commercial construction was also impacted similarly. Civil engineering was only affected in June before rebounding rapidly.

Based on the improving confidence in the housing market, the area of construction is likely to have recovered further, while the surprising resilience of general activity augurs well for commercial construction as well, said Societe Generale in a research note. These factors indicate towards a further rise in the construction PMI, which is likely to have risen to 50.5 in September from 49.2 in August, added Societe Generale.

Meanwhile, the services activity in the U.K. looks resilient. Following the Brexit vote, the wide picture emerging is the one where activity seems to be quite resilient; however, business expectations and capital investment plans have weakened considerably. Therefore, in the short-term, the service activity is likely to stabilize close to pre-vote levels.

“We expect the September services PMI to hold onto most of the gains seen in August in the post-vote rebound, dropping only slightly from 52.9 to 52.0”, stated Societe Generale.