PMI slowdown


UK construction activity dips to an 11-month low as political uncertainty and Brexit aggravates.

In the UK construction sector commercial work decreased at its fastest pace year-on-year, as highlighted by recent data from the Purchasing Managers’ Index. Activity in the construction space slowed to an 11-month low in July 2017 as a result of political uncertainty and caution among businesses on the perceived fallout from Brexit, reveals the latest PMI sector survey. 

Data from the Purchasing Managers’ Index reveals a figure of 51.9, the lowest since August 2016, down from 54.8 in June, and far short of the 54.5 indicator that analysts in the City of London had anticipated.

With a figure of 50 and above signalling growth, the sector index declined from a 52.2 point average 47.6, which marks the market at its lowest point since the Brexit results in June of 2016. Construction accounts for just over 6 per cent of the UK economy.

“Parallels with the darker days of Brexit, worries about the UK economy and post-election uncertainty can be seen across the construction sector,” Duncan Brock - Chartered Institute of Procurement & Supply.

Activity in housing construction has also been tempered, but with steady buyer demand has held firm in positive position.

An IHS Market Spokesperson, Tim Moore commented “Worries about the economic outlook and heightened political uncertainty were key factors contributing to subdued demand. Construction firms reported that clients were more reluctant to spend and had opted to take longer in committing to new projects,” echoing the sentiment of the market. 

In late July of 2017, the Office for National Statistics produced a report measuring the movements of the construction sector and corresponding order books and asserted that it is their estimate that the sector declined by 0.9 per cent in Q2 2017, dampening aggregate UK GDP growth, estimated at just 0.3 per cent. This was in contrast to expansion for the sector of 1.1% in Q1 of 2017.

With a Brexit exit plan still to be determined a further contraction aggravated by market caution is expected in the near term. 

The full PMI market report is available for download here.

#brexit #construction #GDP