Building blow as UK construction output records steepest fall in a decade
Output from Britain’s construction sector has fallen at its steepest rate since 2009, as Brexit concerns and weaker demand hit key areas of the industry.
The closely-watched Markit/ Cips UK construction purchasing managers’ index (PMI) recorded a reading of just 43.1 for June, down from 48.6 in May. Economists were expecting a figure of 49.2. Any reading above 50 denotes growth, below represents contraction.
It marks the steepest reduction in overall output since April 2009 and is the fourth time the sector has been in negative territory in the past five months.
All three main categories declined in June, with commercial work remaining the worst performer and recording its steepest drop since December 2009.
Howard Archer, chief economic advisor to the EY Item Club think-tank, described the findings as “really dire”, coming ahead of a PMI snapshot for the powerhouse services sector.
“While the purchasing managers’ surveys can sometimes overstate economic developments at particularly good or bad times, it is hard to find anything of comfort in this release,” he said.
“The delay of Brexit until 31 October – and current major uncertainties over what will happen then – is worrying for construction companies as it is prolonging uncertainty and fuelling an ongoing reluctance of clients to commit to major construction projects.”
Mark Dyason, MD of specialist development finance provider Thistle Finance, said: “For some time the construction sector has been on the ropes. 2019 is shaping up to be a brutal year for construction, and if the prospects of a no-deal Brexit increase, as appears likely, there is room for further deterioration.”