The case for more monetary stimulus from the Bank of England to boost the UK economy was strengthened further today, after a survey pointed to a weakening construction sector.
The Markit/Cips survey for May showed the slowest growth in the building industry for three months and a pronounced downturn in confidence.
The PMI index fell from 55.8 in April to 54.4 last month, with any figure over 50 signalling expansion, and the index of positive sentiment fell to its lowest level since last October.
The Bank of England’s monetary policy committee voted against extending its £325 billion quantitative easing programme last month, despite the UK slipping into its first double-dip recession since the 1970s.
But since then a host of economic data has pointed to a further weakening of the economy, increasing pressure on the MPC to announce more easing tomorrow after its monthly two-day meeting.
Last week’s Markit/CIPS survey of the manufacturing sector pointed to the biggest collapse in activity since the fall of Lehman Brothers in 2008.
There has been a divergence this year between the picture painted of the construction sector by industry surveys and the official data. The Markit/CIPS survey showed output hitting a two-year high in March. Yet figures from the Office for National Statistics showed construction was one of the sectors that pushed the UK into a new recession this year.
