UK construction activity hits six-month low as Brexit drags on confidence

The Purchasing Managers Index for September was the lowest reading since the snowstorms of March

Ben Chu
Economics Editor
Tuesday 02 October 2018 10:38
Confidence among construction managers was the lowest since early 2013 according to the PMI survey
Confidence among construction managers was the lowest since early 2013 according to the PMI survey

The UK construction sector grew at its weakest pace in six months in September as “Brexit worries” dragged on activity.

The Purchasing Managers’ Index for the month was 52.1, down from 52.9 in August, and the lowest reading since the snowstorms of March.

Confidence among construction managers was also the lowest since early 2013.

“Construction companies continued to note that political uncertainty acted a key drag on decision making, with Brexit worries encouraging a wait-and-see approach to spending among clients,” said Tim Moore of IHS Markit, which compiles the PMI survey.

The Office for National Statistics estimated last week that construction, which accounts for around 6 per cent of UK GDP, grew by 0.8 per cent in the second quarter of 2018, although this followed a 1.6 per cent contraction in the first three months of the year.

The Q1 performance, as the “Beast from the East” shut down building sites across the country, was worse than previously thought.

According to the PMI survey, the civil engineering sector remained in contraction territory in September.

The pace of growth in housebuilding and commercial work also fell back.

Lowest since March

Research from the Construction Industry Training Board released in July suggested a third of UK construction firms are already feeling the effects of Brexit.

Almost half the employers in the sector are concerned that recruitment will become harder over the next two years.

On Monday the PMI for manufacturing also pointed to a “lacklustre” performance in September.

The PMI for services, which account for 80 per cent of the UK economy, will be released on Wednesday.

According to the ONS all the UK’s GDP growth so far in 2018 has come from services.

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