Pound steady as UK votes; global stocks extend rally on US rate cut hopes

In stark contrast, construction in the eurozone remains mired in recession, according to a separate survey. Construction activity shrank at a faster rate last month, with German companies posting the biggest slump.

The PMI from Hamburg Commercial Bank dropped to 41.8 in June from 42.9 in May, signalling a marked contraction in output across the construction sector. The rate of decline was the second-strongest since mid-2020, surpassed only by that seen in January.

The eurozone construction sector is stuck in a recession with no clear path to recovery. The setbacks in the three largest economies in the zone—Germany, France, and Italy—have been particularly severe this month.

Subsector activity shows that residential construction remains the weakest, though there was a slight softening in the pace of decline compared to the previous month. The most significant negative correction from May occurred in civil engineering activity.

However, caution currently prevails at the ECB, and according to HCOB Economics, only one additional interest rate cut is expected well into 2025. This is insufficient to make a significant impact. Therefore, it is understandable that the expectations of surveyed constructors remain in contraction territory.

Continued growth of the UK construction sector in June meant that the sector has recorded sustained expansion throughout the second quarter of the year. While there were signs of a slowdown in the latest survey period, most notably around housing activity, firms indicated that a slowdown in new order growth was in part related to election uncertainty. We may therefore see trends improve once the election period comes to an end.

Moreover, confidence in the year ahead outlook remained strong and firms increased employment to the largest extent in ten months.

Eurozone private sector also loses momentum, with activity at three-month low

In the eurozone, private sector growth eased to a three-month low, with activity in the service industries also at a three-month low, according to a closely-watched survey.

Demand for euro area goods and services declined for the first time since February.