11222017

UK construction performance weakest for seven years in June

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The UK’s construction industry experienced its weakest performance for seven years last month, according to a closely watched survey.

The Markit/CIPS construction purchasing managers’ index fell to 46.0 in June, its lowest level since June 2009. It had been 51.2 in May.

A figure above 50 indicates expansion – below that, contraction.

Most of the data for the survey was collected before the 23 June referendum in which the UK voted to leave the EU.

“However, the extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook,” said Tim Moore, senior economist at Markit.

‘Dire survey’

Markit said a number of firms had commented on reluctance among clients to commence new contracts in the run-up to the referendum, as well as continuing uncertainty about the general economic outlook.

“This is an absolutely dire survey that fuels serious concern over the construction sector,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“The survey can only intensify concern as to just how much the construction sector will be hampered by the Brexit vote.”

He added: “The purchasing managers’ survey points to the construction sector taking a major hit from heightened uncertainty even before the UK voted for Brexit.”

“The government will be particularly worried to see housebuilding contract at the fastest rate since December 2012 and the second fastest rate since April 2009, given that it is looking to address the UK’s acute housing shortage.”

Last week, Markit’s manufacturing index for June showed its strongest reading since January, rising to 52.1.

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