UK con­struc­tion growth drops to 11-month low

Kuwait Times - - BUSI­NESS -

Growth in Bri­tain’s con­struc­tion in­dus­try tum­bled to an 11-month low in July, as a lack­lus­tre out­look for the econ­omy and height­ened po­lit­i­cal un­cer­tainty de­terred new or­ders, a sur­vey showed yes­ter­day.

The Markit/CIPS UK Con­struc­tion Pur­chas­ing Man­agers’ In­dex PMI fell to 51.9 from 54.8 in June, be­low all fore­casts in a Reuters poll of econ­o­mists that had pointed to a read­ing of 54.5. The sur­vey is another mixed sig­nal for Bank of Eng­land pol­i­cy­mak­ers meet­ing this week to set in­ter­est rates. A sis­ter sur­vey on Tues­day had shown Bri­tish man­u­fac­tur­ing growth im­proved last month thanks to an up­turn in ex­ports.

But yes­ter­day’s PMI for con­struc­tion, which ac­counts for around 6 per­cent of Bri­tish eco­nomic out­put, showed a sec­tor strug­gling to main­tain mo­men­tum. “The com­bi­na­tion of weaker or­der books and sharply ris­ing con­struc­tion costs pro­vides a con­cern that an ex­tended soft patch for the con­struc­tion sec­tor may be on the hori­zon,” said Tim Moore, se­nior economist at sur­vey com­piler IHS Markit. Yes­ter­day’s PMI showed new busi­ness vol­umes de­clined for the first time since Au­gust 2016, hurt by a slow­down in the com­mer­cial con­struc­tion sec­tor. Last week the Royal In­sti­tu­tion of Char­tered Sur­vey­ors said de­mand to rent Bri­tish com­mer­cial prop­erty had fallen to a fiveyear low.

Growth in the house­build­ing sec­tor also cooled, re­flect­ing other signs of a slow­down in the hous­ing mar­ket, ac­cord­ing to the PMI. On Mon­day, the Bank of Eng­land said mort­gage ap­provals fell to a ninemonth low in June.

The wan­ing growth in ac­tiv­ity took its toll on con­struc­tion firms’ con­fi­dence about the fu­ture, which fell to its low­est level in a year, IHS Markit said. The Fed­er­a­tion of Mas­ter Builders said on Mon­day that the fall in the ster­ling ex­change rate was caus­ing prices of ma­te­ri­als to soar, squeez­ing mar­gins for a third of small builders and forc­ing nearly a quar­ter to raise prices.

More im­por­tant for BoE of­fi­cials will be to­day’s PMI for the ser­vices in­dus­try, which ac­counts for about 80 per­cent of Bri­tish eco­nomic out­put.

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.