In June the UK construction industry enjoyed a stronger than anticipated recovery, getting past an earlier slowdown and moving the Bank of England closer towards an interest rate increase.
The latest survey from the Chartered Institute of Procurement and Supply and IHS Markit found that in June the market experienced the largest upturn in construction material purchases in two and a half years.
The purchasing manager's index activity gauge- which the Bank closely surveys- reached 52.5 in May, up from 53.1 the month before and reaching the highest level in seven months, despite expectations that the reading would be static. Any PMI reading above 50 is a sign of economic growth.
The industry rebound suggests that much of the difficulties experienced by UK builders earlier this year can be attributed to the “beast from the east” and was not due to bigger problems in the construction trade.
Mike Saunders, who is involved in the Bank’s monetary policy committee for rate-setting, dismissed fears of a slowdown by saying that the nation’s economy was continuing to grow at a steady if modest pace, same as the average of the past couple years.
In a press interview, Mr Saunders warned that if the UK economy continues to improve, interest rates would need to rise.