UK construction suffered shock fall in September down to lowest levels since Brexit referendum

It was the first time the index has been in negative territory since a sharp plunge immediately after the Brexit vote

House builders saw growth, but it was also the weakest in six months (PA)

Britain’s builders suffered a shock in September, as levels of construction activity fell to their lowest since the Brexit vote, according to the latest survey snapshot of the sector.

The Purchasing Managers’ Index (PMI) slumped to 48.1, below the 50 mark that separates growth from contraction.

City of London analysts had anticipated a PMI reading of around 51.

It was the first time the index has been in negative territory since a sharp plunge immediately following the EU referendum result.

“Respondents pointed to obstructive economic conditions and the Brexit blight of uncertainty, freezing clients into indecision over new projects,” said Duncan Brock of the Chartered Institute of Procurement & Supply.

Weakest since Brexit vote

Sterling slipped in the wake of the data, trading down 0.23 per cent on the day at $1.3245, as traders pared back their major bets of recent weeks on a Bank of England rate hike in November.

According to the PMI, civil engineering work suffered its sharpest drop since April 2013, and commercial development projects had the worst month since February 2013.

Markit, which compiles the survey, also reported that confidence in the industry was at its weakest in four years.

“The Government’s shift to a more accommodating stance in Brexit talks has done little to convince builders that clients will sanction delayed projects soon,” said Samuel Tombs of Pantheon.

According to the most recent estimate from the Office for National Statistics (ONS), construction output fell by 0.5 per cent in the second quarter, following a 1.9 per cent surge in the first three months of the year.

Another quarter of contraction will put the building sector back into a technical recession.

The construction sector accounts for around 6 per cent of UK GDP.

The overall economy grew by just 0.3 per cent in the second quarter of 2017: the weakest growth rate of the G7 nations.