Lack of new orders leads to slow down in UK construction industry
ACTIVITY in the UK’S construction industry unexpectedly slowed to a one-year low in August as new business slumped for the second month in a row.
The closely watched Markit/cips UK Construction purchasing managers’ index (PMI) showed a reading of 51.1 last month, down from 51.9 in July with economists’ expecting 52.
A reading above 50 indicates growth. The PMI report pointed to a lack of new orders as the trigger for the slow down, with a healthy performance from housebuilding being countered by the sharpest drop in commercial development since July 2016.
Sterling was marginally down against the US dollar at 1.294 following the update and was 0.5% lower versus the euro at 1.086. It comes as output at UK factories unexpectedly pushed to a four-month high in August in an encouraging sign for the overall economy following a lacklustre start to the year.
Tim Moore, associate director at IHS Markit, said: “Survey respondents noted that subdued business investment and concerns about the UK economic outlook had led to a lack of new work to replace completed projects, especially in the commercial building sector.
“There were signs that UK construction firms are bracing for the soft patch to continue into this autumn, with fragile business confidence contributing to weaker trends for job creation and input buying during August.”
Employment was also suffering in response to the weak orders and activity.