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British construction returned to growth last month buoyed by a rebound in housebuilding Neil Hall/ Reuters

British construction returned to growth in September, buoyed by a rebound in housebuilding as output picked up in the months after the country's Brexit vote.

The closely-watched Markit/CIPS UK Construction Purchasing Managers' Index posted a reading of 52.3 in September, up from 49.2 in August.

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A reading above the 50.0 mark indicates growth, and September was the first time in four months the sector had reported signs of expansion.

This latest reading is also well above July's seven-year low, a month after Britain's vote to leave the EU on 23 June.

The report said firms "cited improving confidence among clients and a reduced drag on demand from Brexit-related uncertainty".

Companies in the sector were also optimistic about business prospects over the coming 12 months since May.

Tim Moore, senior economist at IHS Markit, said: "UK construction companies moved back into expansion mode during September, led by a swift recovery in residential building from the three-and-a-half year low recorded in June."

"Resilient housing market conditions and a renewed upturn in civil engineering activity helped to drive an overall improvement in construction output volumes for the first time since the EU referendum."

However, in a sign of the different priorities between domestic and international markets the pound fell to a 31-year low against the dollar as markets continued to digest Prime Minister Theresa May's weekend speech declaring that the UK will trigger Brexit negotiations by the end of March.

Also, the FTSE 100 Index of the UK's leading blue-chip companies bounced over the 7,000 point mark at the start of trading, for the first time in 16 months, as British stocks become a cheaper buy for foreign investors.

Earlier this week the government announced measures to boost the construction industry, which accounts for 6% of the economy, by launching a £5bn ($6.5bn) homebuilding stimulus package including £2bn of government borrowing to help build 40,000 houses by 2020.

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