LONDON: Approvals for home loans in Britain rose unexpectedly in March, suggesting the housing market may be continuing to recover despite the end of a tax exemption for first-time buyers, Bank of England data showed on Wednesday.
A separate release showed that the Markit-CIPS Construction Purchasing Managers' Index (PMI) eased to 55.8 from the previous month's 21-month high of 56.7, still well above the 50 level which separates growth from contraction and beating forecasts for a fall to 54.0.
ECONOMISTS' COMMENTS:
PETER DIXON, COMMERZBANK
"The lending figures remain extremely weak so I wouldn't place too much weight on those."
"Looking at the mortgage approvals, these are the figures for March so don't forget that they're still buoyed by the tax effect for first-time buyers. Let's see how the April figures look but obviously they were a slightly pleasant surprise."
ON CONSTRUCTION PMI
"The most important figure I think was the construction PMI which held up close to the previous months' levels but I think something is wrong somewhere. Either the ONS or Markit has got this number wrong and I don't know who but I'm inclined to believe that the construction sector was stronger than the ONS estimated it to be so I think we've got to look at these numbers and say the construction sector is holding up, it's doing ok, it's not stellar, it's not a spectacular number but it's ok and
"I think it gives us a bit of ground for hope that at some point in the future that first quarter GDP figures might be revised up."
PHILIP SHAW, INVESTEC:
"It has been a mixed bag of data. The most interesting point is that mortgages approvals inched up in March despite the expiry of the stamp duty exemption for first time buyers in the month.
"It is not a big move but it is a sign of some underlying momentum in terms of housing transactions.
"Obviously these aren't the biggest releases of the week, but they do hint at least at a degree of resilience in UK activity.
"With the construction PMI being stronger than expected and well above 50, it does paint a starkly different picture than the official data. That's not to say that one or the other is correct but there is a big difference.
"Our own view is that construction output is probably declining but not to extend the official ONS figures are suggesting."
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