UK construction dogged by Brexit uncertainty in October, figures show

The latest Purchasing Managers’ Index (PMI) survey showed optimism falling to its lowest level in six years

(Reuters)

Brexit uncertainty dogged Britain’s builders in October according to the latest survey snapshot of the sector.

The latest Purchasing Managers’ Index (PMI) survey showed optimism falling to its lowest level in six years and firms citing “uncertainty related to Brexit” as a major factor undermining confidence in the month.

However, the PMI rose to 53.2 in the month, its second highest level in 16 months.

Civil engineering grew at the strongest pace since July 2017, but housebuilding was the weakest in seven months and commercial construction the weakest in five.

“On the surface, the construction sector showed growth but there was plenty for businesses to be concerned about underneath,” said Duncan Brock of the Chartered Institute of Procurement & Supply, which sponsors the PMI.

“Despite improved activity in October, it is evident that there are significant headwinds hampering the construction sectors’ ability to sustain healthy growth,” said Howard Archer of the EY Item Club.

“Some client’s willingness to commit to major new projects at this stage is being limited by Brexit uncertainties and concerns over the economy. A shortage of new infrastructure projects to bid for has also been a concern for the civil engineering sector.”

Construction accounts for around 6 per cent of UK GDP.

The latest official data suggests that the sector grew by 1.6 per cent in the three months to August, but this came after a severe contraction earlier in the year during the Beast from the East snow storms.

The PMI survey for manufacturing showed that activity in the sector hit a two-year low in October, reflecting the impact of a slowdown in global trade.

The next survey for services, which account for 80 per cent of the UK economy, will be released on Monday.

According to the ONS quarterly GDP growth was 0.7 per cent in the three months to August, up from 0.4 per cent in the second quarter.

The Bank of England, in its latest forecasts on Thursday, said it expects GDP growth to come in at 0.6 per cent in the third quarter, before dropping sharply to 0.3 per cent in the final three months of 2018.