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By HaleStewart November 5, 2013 5:35 pm
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UK News Continues to Be Pound Bullish

Thanks to a period of forced austerity, the UK economy experienced very slow growth, as shown in the following chart:

From the end of 2011 to the first quarter of this year, the best rate of annual growth for the UK economy was 1.1%.  However, also notice that over the last two quarters we’ve seen a marked acceleration of growth, with the annual rate printing at 1.3% and 1.5% in the last two readings. 

Two recent numbers issued by Markit indicate the rate of expansion looks likely to continue.  First there is the most recent construction survey:

October data indicated that a sharp rebound in UK construction output continued at the start of the fourth quarter. Adjusted for seasonal factors, the Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) posted 59.4, up from 58.9 in September and above the 50.0 no-change threshold for the sixth consecutive month. The latest reading signalled that overall output growth surpassed August’s recent peak and was the steepest since September 2007

This is the best reading for the survey in the last 6 years.  And the services sector also shows strong promise going forward:

The UK service sector maintained its recent run of strong growth during October, with activity expanding at the fastest pace since May 1997 as levels of incoming new business rose at a survey record rate. Capacity was subsequently tested, with backlogs increasing at a sharp pace. Companies responded by adding to their payrolls, and the rate of growth was the best seen in nearly sixteen-and a-half years.

These numbers are very pound bullish.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

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