UK construction industry shows signs of ‘renewed slowdown’ in August

Uncertainty around Brexit the most commonly cited reason holding back sentiment

Less work was available on civil engineering projects in August with firms blaming a lack of infrastructure investment (Crossrail)

The UK construction sector showed signs of a “renewed slowdown” in August as a closely watched index of activity came in well below expectations.

The construction industry purchasing managers’ index (PMI) dropped to 52.9 in August from a 14-month high of 55.8 in July and behind economists’ predictions of 55.0. Any number above 50 indicates growth.

UK builders are optimistic that they will grow their business over the coming 12 months, but the degree of confidence eased to its weakest since May. Uncertainty surrounding Brexit remained the factor most commonly cited as holding back sentiment.

Civil engineering was the worst-performing sector, with the amount work decreasing for the first time in five months due to a lack of progress on infrastructure projects. Housebuilding also slowed down, while commercial construction registered the best performance.

The construction industry had bounced back in July from poor performance earlier in the year as firms caught up on work delayed by poor weather in the Spring, but the latest data indicates that temporary boost has ended.

“August data pointed to a renewed slowdown in output growth across the UK construction sector, with all three broad categories of activity recording a loss of momentum since the previous month,” IHS Markit said on Tuesday.

“That said, there were signs of resilience in terms of underlying workloads, with the latest survey signalling another solid upturn in new business.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “Cracks in the construction sector’s masonry were beginning to show again this month, and the house building sub-sector was hit the hardest as it reported the poorest performance since March this year.

“Civil engineering saw a drop off in larger infrastructure projects and found itself in contraction territory.

“Levels of new work held moderately steady overall, but with any significant growth held back by Brexit uncertainty.

“It was also the logjams in supply routes that hampered work in hand where material and skills shortages meant vendor performance deteriorated to its worst level since March 2015.”