UK Construction PMI Improves as Busy Builders Support Sector

Written by: Tsveta van Son
May 3, 2013

**Rise in Housebuilding Lifts Construction PMI to Six-Month High**

Data released on Thursday, May 2, showed that a surprise rise in property investment confidence and housebuilding helped Britain’s construction sector to post its best performance in half a year. The Markit/CIPS Construction Purchasing Managers’ Index (PMI) rose to 49.4 in April from 47.2 the previous month, slightly below the 50 level that divides growth from contraction but well above economists’ expectations for a reading of 48. Last month’s PMI level was also the highest in six months for a sector that has been the biggest drag on Britain’s economic growth during the first quarter of the year.

Tim Moore, senior economist at Markit, said that the UK construction sector bounced back following a disruption to work caused by the cold weather earlier in the year, and was mainly led by higher levels of residential housebuilding. In particular, real estate companies cited new builds amid accelerating interest in property investment in this market segment. According to Markit, several government measures, announced by George Osborne in March and aimed at supporting the country’s housing industry, had improved confidence among builders.

Construction, which accounts for about seven percent of Britain’s gross domestic product, was the biggest drag on the economy during the first quarter of 2013, lopping 0.2 percentage points off the country’s GDP over the period. Commenting on the latest construction PMI, Moore said: ” The overall survey findings are an early indication that construction will act as less of a drag on UK GDP over the second quarter of 2013.”

Thursday’s data added to hopes that a recovery in the construction industry is finally gaining traction after years of decline. Further supporting the upwards trend, UK property investment and development company Capital & Counties Properties (LON:CAPC) reported a strong start to the year in its latest Interim Management Statement, released on May 3.

**Capital & Counties Share Price Edges Higher on Upbeat Interim Performance**
!m[](/uploads/story/2086/thumbs/pic1_inline.png)Capital & Counties Properties (Capco) said its financial position remains strong after being boosted by high demand in the central London retail and residential property markets. In the period ended March 31, the company’s gross debt was £343 million, down from the previous quarter’s £348 million. Cash balance fell to £145 million from £185 million, Capital & Countries announced in its Interim Management Statement.
Chief Executive Officer Ian Hawksworth said in a statement, accompanying the report: “Capco has had an active start to the year reflecting the positive conditions in the central London retail and residential property markets and the quality of the group’s portfolio.”
**Following the upbeat report, the Capital & Counties share price edged higher in London. Climbing almost one percent, the stock was trading at 310.20p as of 10:45 GMT on May 3. Reflecting investors’ improved sentiment, the Capital & Counties share price has gained almost 28 percent since the beginning of the year.**

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