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Financial News: UK Construction Shrinks Most In Over A Year

UK Construction Shrinks Most In Over A Year

06/04/2019 - 07:55:00 (RTTNews)

(RTTNews) - The UK construction activity contracted at the fastest pace in more than a year in May as subdued domestic economic conditions, in the wake of Brexit, weighed on the sector, results of a closely-watched survey showed Tuesday.

The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index fell unexpectedly to 48.6 in May from 50.5 in April. A score below 50 indicates contraction.

Economists had forecast the reading to rise marginally to 50.6 in May. The latest score was the lowest since the snow-related downturn in construction output during March 2018.

Survey respondents once again raised concerns that the subdued domestic economic outlook and delays related to the Brexit uncertainty had curtailed their near-term growth prospects, Tim Moore, an associate director at IHS Markit, said.

The survey showed that lower volumes of commercial work and civil engineering activity more than offset a moderate growth in house building.

Commercial building was the weakest area of construction, with the fall in output the biggest since September 2017. Clients held back their major spending decisions in response to Brexit uncertainty and concerns about the economic outlook.

At the same time, civil engineering activity dropped for the fourth consecutive month largely due to constrained client budgets and a headwind from political uncertainty.

Meanwhile, residential work expanded in May, albeit at the weakest pace for three months.

New orders received by contractors logged the steepest fall since March 2018 as companies faced strong competition, hesitancy among clients and longer sales conversion periods.

Moreover, reduced workloads led to more cautious recruitment strategies. Consequently, employment signaled the sharpest drop for six-and-a-half years.

On the price front, the survey showed that the overall rate of input price inflation eased to its weakest since June 2016.

Meanwhile, construction firms signaled a fall in business optimism to its lowest since October 2018.

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