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Construction sector continues growing

Construction sector continues growing

Britain's construction sector is still growing but has slowed down, a new survey has revealed.

The Purchasing Managers Index (PMI) survey for July by Markit and the Chartered Institute of Purchasing and Supply (CIPS) gave a reading of 51.9, which is still above the reading of 50 that marks zero growth. Anything below this figure represents contraction.

However, while the sector is still growing, this is the weakest figure recorded since August last year, when the UK was still digesting the implications of the referendum vote to leave the EU. It is also well below the long-term average reading of 54.5.

The greatest area of decline was in commercial construction, while housebuilding also slowed, albeit while remaining the strongest part of the sector. Civil engineering bucked the general trend by improving.

Construction recuitment continued to increase, but at the slowest rate in 11 months. This may suggest that the situation in July this year was an echo of what happened in 2016, with a major vote in June bringing political uncertainty. With a Brexit settlement still to be decided and further turmoil at Westminster after the indecisive election result, political uncertainty has been a big factor and the survey found many respondents were unwilling to make big decisions.

Markit economist Tim Moore reflected: "Worries about the economic outlook and heightened political uncertainty were key factors contributing to subdued demand. Construction firms reported that clients were more reluctant to spend and had opted to take longer in committing to new projects." 

Similarly, director of customer relationships at CIPS Duncan Brock said: "Parallels with the darker days of Brexit, worries about the UK economy and post-election uncertainty can be seen across the construction sector."

Amid such uncertainty, civil engineering may go on being the biggest growth area, particularly following the government's commitment to Crossrail 2. However, this may be reduced by the contentious decision not to proceed with rail electrification projects elsewhere in the country.

Image: iStock

 

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