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U.K. construction companies record weak start to 2018, PMI index falls to 50.2

Construction firms in the U.K. recorded a weak beginning to this year, with total industry activity barely rising. The seasonally adjusted IHS Markit UK construction PMI index dropped from 52.2 in December to 50.2. The print was just above the neutral 50.0 no-change mark, thus hinting at a fractional pace of growth that was the most subdued for four months. The latest data hinted that the sector’s key growth driver, which is house building, fell into decline, putting a halt to a 16-month expansion.

In the meantime, commercial building returned to growth, reversing a six-month period of fall, though the growth rate was just marginal. Civil engineering activity also grew, indicating a rebound on the declines seen at the end of 2017, though the rise was likewise only very modest. The pace of job creation slowed to an 18-month low consistent with the reduced growth of building activity. Whilst some companies hired more staff in expectation of future new project wins, other recorded job shedding in response to lower workloads.

U.K. construction firms’ new orders received dropped a bit for the first time in four months in the latest survey period. Several respondents attributed the declining new business to concerns boosted by general political and economic uncertainty. Cost pressures continued to be intense in January despite weakening slightly since December. Inflation in input costs was led by a variety of materials such as copper, bricks and timber.

Sub-contractor usage rose in January, thus ending a ten-month sequence of decline. Moreover, the latest growth was the most solid seen in over a year.

At 14:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral -21.3412, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 107.959. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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