By Marcus Leach

Data released today (Wednesday) signalled a solid rise in UK construction sector output, extending the period of sustained expansion to 12 months.

Jeremy Cook, chief economist at foreign exchange company, World First, said the data represented some much needed good news.

“Although it makes up a smaller percentage of UK output than either the manufacturing or services sector, this represents some much needed good news for the economy, to start off the new year," he said.

“The data shows that the sector expanded in every month of 2011; something the others were unable to achieve.

“Gains were also seen in all components, i.e. home building, commercial building and civil engineering.

“The news has had a limited effect on the value of sterling so far, however, which is unchanged on the day versus both the euro and US dollar.”

However, Richard Driver, analyst for Caxton FX, said that despite providing some positive news it has failed to spark any relief in the market.

“While December’s improvements in the UK manufacturing and construction sectors are a definite positive, they have unfortunately failed to spark much relief in the market," he said.

“The manufacturing sector remains in contraction and the construction sector represents a pretty negligible percentage of overall UK GDP.

“It is the pessimistic view of the UK economy as a whole that is dominating at present, with flat growth for Q4 2011 being a good result as things stand.

“The outlook for 2012 remains very gloomy indeed and ultimately, developments in the eurozone will have the final say over whether the UK plunges back into recession.”

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