Construction industry hit by August slowdown

Britain’s construction sector suffered a “loss of momentum” last month as Brexit uncertainty continues to dampen sentiment.

The Markit/CIPS UK Construction purchasing managers’ index (PMI) fell to 52.9 in August, down from 55.8 in July.

While a reading above 50 indicates growth, the figure is well below economists’ expectations of 54.9.

August’s data pointed to a “renewed slowdown” in output growth across with all three categories of activity – commercial, residential and civil engineering – recording a loss of momentum compared with the previous month.

Tim Moore, associate director at IHS Markit, said: “The construction sector slipped back into a slower growth phase in August, with this summer’s catch-up effect starting to unwind after projects were delayed by adverse weather at the start of 2018.

“Civil engineering was the worst-performing area of the construction sector, with output in this category falling for the first time since March amid reports citing a lack of new work on infrastructure projects.

“House-building saw a particularly sharp slowdown since July, meaning that commercial construction was the fastest growing sub-sector in August.”

Brexit uncertainty remained the main factor cited as holding back sentiment, IHS added.

Sterling dipped on the news, with the British currency down 0.3% on the day versus the dollar at 1.28.

However, the survey also said there were “signs of resilience” in terms of underlying workloads, with a “solid upturn” in new business and employment growth holding at its two-and-and-a-half-year peak.

But Duncan Brock, group director at the Chartered Institute of Procurement & Supply, painted a bleak picture.

“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.”

The lacklustre construction figures follow hot on the heels of poor manufacturing date.

Manufacturing output fell to its lowest level in more than two years in August following a collapse in overseas demand.