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UK construction sector expands further as mortgage approvals beat estimates

June 10th, 2010

Today the attention is on the UK data which showed that the construction sector beat estimates which hinted the housing sector is improving further as mortgage approvals mark the highest in four months as the weather is heating up in Britain.

PMI construction, which represents nearly 6% of GDP in May climbed to 58.5 from 58.2, surpassing the projected 58.0. The construction sector resumed its expansion which hints that the housing sector is reviving.

It is not just the construction sector that has been showing enhancement, but the manufacturing sector yesterday we witnessed continue to expand while surpassing market expectations.

More news from today, mortgage approvals in April inclined to 49.9 thousand from the revised prior reading of 49.0 from 48.9 thousand which beat the estimated 49.5 thousand.

As the weather is improving and ending the harshest weather since 1979 alongside the transaction cost taxes on houses ending for first-time buyers, helped increase demand on houses, which at the end supported the housing sector.

Hometrack Ltd. which are property researchers, said that the new plan by Prime Minister David Cameron to cut spending by 6.2 billion pounds will hurt household’s income and negatively affect housing activity.

For more news today, net consumer credit dor April fell 0.1 billion pounds from the revised previous 0.1 from 0.3 billion pounds while net lending secured on dwellings rose to 0.5 billion pounds from the revised prior of 0.2 from 0.3 billion pounds.

As the BoE continues to leave interest rates low at 0.50%, banks are holding back lending as a way to restructure their balance sheets after the worst financial crisis since the Great Depression had weighed on the strength of the nation heavily.

Officials are not worried about the housing sector as much as they are worried about the debt crisis in the nation, as they have the highest budget deficit since WWII, which is why officials are working around the clock to contain the debt before it threatens the economic recovery even further.

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