Investing.com - U.K. construction sector activity unexpectedly registered growth in September for the first time in five months, industry data showed on Tuesday.
In a report, market research firm Markit and the Chartered Institute of Purchasing & Supply (CIPS) said that their U.K. construction purchasing managers' index rose to a seasonally adjusted 52.3 from August’s reading of 49.2.
Economists had expected the index to drop to 49.0 in September.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
This was the first growth in the business activity since last May and included the fastest increase in new orders for the last six months.
Markit noted that a solid upturn in housing activity offset the decline in commercial work.
“Resilient housing market conditions and a renewed upturn in civil engineering activity helped to drive an overall improvement in construction output volumes for the first time since the EU referendum,” Markit senior economist Tim Moore.
“A number of survey respondents noted that Brexit-related anxiety has receded among clients, although it remained a factor behind the ongoing decline in commercial building work,” he added.
Moore noted that construction firms appeared optimistic on the near-term outlook on the back of the fast rise in new orders and positive economic newsflow in general.
He did warn that the growth trajectory still remained on a much weaker path than that seen at the start of 2016 and that the weak pound contributed to a sharp acceleration in cost inflation.
Immediately following the report, the pound pared losses. GBP/USD was trading at 1.2784 from around 1.2772 ahead of the release of the data, EUR/GBP was at 0.8741 from 0.8753 earlier, while GBP/JPY traded at 130.78 compared to 130.71 previously.
Meanwhile, European stock markets were trading higher. London’s FTSE 100 gained 1.28%, the Euro Stoxx 50 rose 0.83%, France's CAC 40 traded up 0.96%, while Germany's DAX advanced 0.71%.