Construction activity in the U.K. surprisingly returned to growth in the first month of the year after harsh winter weather limited the industry the previous month, according to Bloomberg. On Wednesday, the Chartered Institute of Purchasing and Supply reported that its index of building activity rose to 53.7 in January from 49.1 the prior month to rebound back into expansion, outpacing analysts’ forecasts for a small increase to 49.5. Howard Archer of IHS Global Insight said the report “boosts hopes that the construction sector can return to growth in the first quarter of 2011 after contracting markedly.”
The positive data comes as a boost given what Archer called “an increasingly challenging environment,” and he warned, “Construction activity will be hit appreciably by the coalition government’s extended pruning of public spending.” According to The Daily Telegraph, the Institute for Fiscal Studies said on Wednesday that the government should proceed as planned with austerity measures, despite questions about the strength of the overall economic recovery. The IFS said a loosening of spending cuts “risks undermining investor confidence,” and would likely trigger “offsetting monetary tightening” as the Bank of England struggles to balance weak growth and high inflation.
Click here to read the story on construction from Bloomberg News.
Click here for coverage of the IFS report from The Daily Telegraph.