What's going on?

Two key indicators of the UK�s economic health were released this week, and both were better than expected. It�s not all gloomy in Brexit Britain.

What does this mean?

The Purchasing Managers� Index (PMI) surveys companies to find out if sectors of the economy are growing or not. On Tuesday, the November data for the UK�s construction sector was released, showing that building activity grew at its fastest pace in four months. Housing was a particularly robust area: everybody needs somewhere to live. UK manufacturing also exceeded expectations in November, although that increased growth was driven entirely by stronger domestic demand: British companies (including the manufacturers themselves) are stockpiling goods, potentially because of Brexit.


Things are arguably worse in Europe, however: the eurozone�s manufacturing PMI fell for the third month in a row, with factories struggling to book new orders. With the continent�s largest economy shrinking, the bad news is piling up.

Why should I care?

For markets: No more keeping calm�

Though last month�s data was positive, optimism for the future of British manufacturing was the lowest it�s been for over two years. With the Bank of England warnings of a really bad recession in the event of a no-deal Brexit � potentially even worse than 2008 � businesses are hoping that politicians will be able to engineer a smooth departure from the European Union. The fact that they�re stockpiling goods suggests that they�re far from confident, however…

The bigger picture: The US is a different story.

In the US, manufacturing activity jumped by much more than analysts had predicted last month, despite the ongoing trade war with China. If the promised truce leads to a longer-term deal, that activity may get even better. Construction, on the other hand, is struggling in the US: fewer homes are being built, and the cost of materials and labor is increasing.