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Friday, 22 November

Building Falling Down

The latest Markit/CIPS UK Construction PMI figures, just out, reveal that output in the construction industry fell slightly on last month’s activity.

July’s release is the first UK construction PMI survey to compile all its findings after the result of the EU referendum. The UK construction PMI for July was 45.9, down very slightly from June’s figure of 46.0 and still below the score of 50.0 indicating growth. The figures indicate that construction industry contracted at its fastest pace since June 2009.

Commercial building dropped at its steepest rate for over six and a half years, while the civil engineering sector also experienced a fall in output for the first time this year.

Housebuilding saw a steady decline in July but the wasn’t as sharp as the last month’s three and a half year low.

A lack of new work meant a decrease in employment numbers for the first time since May 2013.

There was a sharp increase recorded in material prices, rising at its fastest rate since March 2015. This was despite the fact that there was a lower demand.

Confidence also took a hit with the business outlook for the coming year being at its lowest level since April 2013.



Construction companies cite concerns about a lack of private sector investment and a hope that stability would be restored in the year ahead.

Tim Moore, Markit Senior Economist said that some positivity could be taken from the fact that the monthly fall in output was only marginally worse than June’s seven year low. He commented: “There were also some reports that demand patterns had been more resilient than expected given the uncertain business outlook. Reflecting this, new order volumes and purchasing activity both dropped at a slightly slower pace than in the previous month.

“Construction firms generally suggested that clients had adopted a wait-and-see approach rather than curtailed or cancelled forthcoming projects during July. While there is little to suggest an imminent turnaround in business conditions, a relief factor appears to have softened the fall in business optimism among UK construction companies."

Moore also said that while confidence had taken a hit following Brexit, its level was only as low as it had been in April 2013 and was 'still well above the record lows experienced in 2008/09'.

Picture: Building has slowed down but is not as bad as the lows of 2008/9

Article written by Brian Shillibeer


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