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UK construction activity falls to three-year low

04/05/2016

Growth in the United Kingdom construction sector fell to the lowest rate in nearly three years in April, as uncertainty over the result of the EU referendum and the stagnation of new business hit productivity.

According to Markit, the trend is likely to continue into the coming months as uncertainty over the wider economy remains in place.

Housebuilding was the only slight positive in the construction sector, rebounding from its 38-month low in March, while at the other end of the scale, commercial building dropped to its slowest growth rate since July 2013, according to Markit.

Outside of construction, Markit also recognised that employment growth fell to one of the slowest rates in three years in April.

The overall fall in activity saw Markit’s own Purchasing Managers Index (PMI) fall to 52 in April. While this is still above 50, the level that signifies growth, it does represent a shortfall on analysts’ projected forecast of 54. It’s also a considerable drop from the 54.2 recorded in March.

Senior Economist at Markit, Tim Moore, commented that the “sluggish growth conditions” were likely to continue. He said: “Stalling new order volumes not only set the scene for further weakness ahead, but are already weighing on staff hiring and input buying across the construction sector," he said.

“Softer growth forecasts for the UK economy alongside uncertainty ahead of the EU referendum appear to have provided reasons for clients to delay major spending decisions until the fog has lifted."

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