Sur­prise drop in con­struc­tion adds to slow­down fears

Yorkshire Post - Business - - FRONT PAGE -

GROWTH IN Bri­tain’s con­struc­tion in­dus­try un­ex­pect­edly dipped to a 10-month low in Fe­bru­ary, a sur­vey pub­lished yes­ter­day showed, adding to signs of a slow­down in the econ­omy.

The Markit/CIPS UK Con­struc­tion Pur­chas­ing Man­agers’ In­dex (PMI) weak­ened to 54.2 from 55.0, below all the fore­casts in a Reuters poll of econ­o­mists who had largely ex­pected the in­dex to rise to 55.5.

House­build­ing ex­panded at the slow­est pace since June 2013, when Bri­tain’s eco­nomic re­cov­ery was just start­ing to take hold, and con­struc­tion firms hired staff at the weak­est rate since Au­gust that year as op­ti­mism faded.

The con­struc­tion sur­vey fol­lows Tues­day’s man­u­fac­tur­ing PMI, which showed Bri­tish fac­to­ries had their weak­est month in nearly three years in Fe­bru­ary.

Bank of Eng­land pol­i­cy­mak­ers, who have sounded more cau­tious about the econ­omy over the last cou­ple of weeks, will be watch­ing to­day’s ser­vices PMI care­fully, given it rep­re­sents by far the largest chunk of Bri­tain’s pri­vate sec­tor econ­omy.

“Aside from the pre-elec­tion slow­down last year, the lat­est up­turn in con­struc­tion out­put was the weak­est for over-two-anda-half years,” Tim Moore, se­nior econ­o­mist from sur­vey com­piler Markit, said.

Op­ti­mism among con­struc­tion com­pa­nies about busi­ness ac­tiv­ity for the year ahead fell to its low­est level since De­cem­ber 2014.

“What’s dif­fer­ent this time around is that con­struc­tion com­pa­nies have cut back on em­ploy­ment growth in re­sponse to the un­cer­tain busi­ness out­look,” Mr Moore said.

Con­struc­tion firms pur­chased goods and ma­te­rial at the slow­est pace since mid-2013.

Mr Moore de­scribed this as a sign that con­struc­tion firms are pre­par­ing for an ex­tended patch of softer growth this year.

As well as the weaker global econ­omy, Bri­tain’s ref­er­en­dum on its mem­ber­ship of the Euro­pean Union, which will take place on June 23, is likely to add to un­cer­tainty for firms and house­holds, econ­o­mists have said.

TIM MOORE: Con­struc­tion firms are pre­par­ing for an ex­tended patch of softer growth.

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