Service sector in spotlight as construction dealt a blow
● Concerns raised as manufacturing sector also cools ● Latest slowdown in construction blamed on Brexit
A key survey will today reveal if Britain’s powerhouse services sector managed to stage a recovery last month after more grim news yesterday on the state of the economy.
The closely-watched IHS Markit/cips purchasing managers’ index (PMI) will provide an indication on the health of the services industry, which accounts for more than twothirds of the UK economy, although the PMI measure does not include the embattled retail sector.
September’s disappointing services reading of 49.5 was below the 50 mark that separates growth from contraction.
The snapshot will follow yesterday’s news that the construction PMI hit 44.2 in October, marking six consecutive months of sector decline, although the latest reading was a minor improvement compared with September. Any reading below 50 denotes contraction.
Data is collected through interviews with purchasing managers to test sentiment and real-time information on the state of the industry.
The survey also found that construction companies continued to reduce their workforce numbers in October, due to weak order books and concerns by managers of the near-term business outlook. Civil engineering was the worst performing area, with business activity falling at the sharpest pace since October 2009.
House building also decreased at a faster rate last month, with residential work seeing the biggest drop in three years. Commercial construction fell, for the tenth month in a row, but the speed of decline eased.
On Friday, the manufacturing sector recorded a PMI score of 49.6 for October, which was an improvement on the 48.3 recorded in September, although this was mainly put down to stockpiling ahead of the now-delayed 31 October EU departure deadline.
Brian Berry, head of the Federation of Master Builders, said: “Following a Halloween Brexit delay, the spectre of uncertainty continues to haunt the construction industry, and this is leading to a sustained decline not seen in over six years.
“A Brexit delay, while giving some respite by avoiding a nodeal Brexit, has just led to further uncertainty and stagnation.
“We know that many homeowners are holding off undertaking home improvement works due to Brexit uncertainty and this is having a knockon effect of builders workloads.”
Mark Robinson, boss of Scape Group, added: “British building has largely been put on hold while government gets its ducks in a row, but as our EU exit date continues to be pushed back we cannot continue to stand by and watch the industry shrink.”