United Kingdom construction output growth slows slightly in December

Momentum in business activity is not yet back to where it was in October 2016 but it’s improving

The reading in December means that activity in the United Kingdom manufacturing sector decreased slightly in December, but continued to expand at a solid pace, according to a survey data on Tuesday.

Latest data showed core sector, spanning coal, steel, crude oil, refinery products, steel, cement, fertiliser and electricity, rose at a 13-month high of 6.8% in November while auto sales grew 9.2% in 2017 compared to the previous year.

Strong rates of expansion in output, new orders and employment were the main drivers behind the manufacturing PMI reaching its highest level since the survey began in mid-1997, IHS said.

Acting as a backdrop, Caixin's Chinese services PMI shot up from a reading of 51.6 in November to 53.0 for December. Panellists attributed greater production to more favourable demand conditions and increased new order volumes.

Pacing gains on the latter was stock in Fiat Chrysler and Ubi Banca, with the former apparently boosted by the outlook for sales on the other side of the Pond thanks to recently approved tax cuts. Increased capacity pressures were also reflected in backlog accumulation.

Stronger demand has allowed firms to raise prices at the fastest pace in 10 months to make up for rising input costs.

At the same time, consumer credit continued to expand at a fairly strong £1.4bn on the month.

"India's service economy showed signs of recovery as it returned to marginal expansion in December", said Aashna Dodhia, economist at IHS Markit and author of the report.

The number of new jobs being created across the sector touched its highest level since June, according to the report, which showed housebuilding work had grown for the 16th month on the bounce.

PMI data saw record highs in Austria, Germany and Ireland and remained close to November's peak in the Netherlands.

"A key development to watch out for in 2018 is the potential advent of accelerating inflation", said Larry Hatheway, chief economist at GAM.

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