Stronger pound in the coming period
The British construction sector grow for the fourth month in a row in May and showed the strongest production growth in just under seven years, the results of a survey published by IHS Markit showed on Friday.
The authorized Institute for Procurement and Procurement index of procurement managers rose to 64.2 in May from 61.6 in April. The result was above the value of 50.0 without change for the fourth month in a row and exceeded the forecast of economists of 62.3.
The volume of new orders has increased rapidly since the survey began just over 24 years ago. Another significant increase in the number of employees was recorded in May. The rate of job creation was the fastest since July 2014.
Construction companies continued to be very optimistic about their growth prospects over the next 12 months. The positive mood was mainly attributed to the revival of customer demand and optimism about the UK’s economic prospects after the successful introduction of the vaccine.
The rapid introduction of vaccines in the UK, with almost 50% of the adult population now fully vaccinated, will be key to our projection of strong consumer-led growth over the next 12 months. We agree with the outgoing chief economist of the BoE that an atypical recession should result in an atypical recovery. This indicates an early reversal of ultralight monetary policy compared to that seen after the global financial crisis.
Strong consumer-led activities should support the currency, which should be relatively stable against the USD and the euro and yen. The key risk is the growing tide of cases of the Indian variant of Covid, which entails the possibility of delaying the opening of the country. It seems that the variant is not so resistant to those who have completed the vaccination program.
