Summary:
- UK Construction PMI: 49.5 vs 50.5 exp
- Lowest level for this indicator in almost a year
- Golden cross seen on GBPUSD as market tests resistance
According to the latest survey amongst purchasing managers, the outlook for the construction sector is rather bleak, with the PMI reading for February coming in worse than expected and at its lowest level in almost a year. The decline was also larger than consensus forecasts, while a reading of 49.5 means that this indicator has once more slipped in contraction territory below the 50 handle. The fall last March was attributed to unseasonably late snowfall, but this time no such excuses can be rolled out, with the main reasons for this latest drop being sharp falls in both commercial building activity and civil engineering.
Construction PMI has once more fallen below the 50 level in the UK, with the sector moving back into contraction territory. All three industry surveys are under pressure and trending lower of late. Source: XTB Macrobond
The construction figure was the second of three PMIs released in consecutive business days after Friday saw the manufacturing equivalent come in as expected at 52.0. Tomorrow’s services number is the biggest of the three and with a consensus forecast of 50.0, there’s every chance that this could also drop into contraction territory. There’s been a minimal reaction in the pound however, with the markets looking through near-term economic data to focus on the latest on the Brexit front.
GBPUSD has formed a Golden cross with the 50 SMA moving above the 200 SMA. Last week saw the market hit its highest level in over 7 months on rising hopes of a softer Brexit outcome. 1.3350-1.3500 may prove to be rather formidable resistance but a break above there would open up the chance for a move back to the 1.40 region. Source: xStation
