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| Version 1 | Version 2 |
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| UK construction sector activity falls further in July | UK construction sector activity falls further in July |
| (21 days later) | |
| The UK’s construction industry recorded its fastest fall since June 2009 as the sector came under pressure from economic uncertainty prompted by Britain’s vote to leave the EU. | The UK’s construction industry recorded its fastest fall since June 2009 as the sector came under pressure from economic uncertainty prompted by Britain’s vote to leave the EU. |
| The Markit/CIPS construction purchasing managers’ index (PMI) was 45.9 in July, down slightly from 46 in June but above economists’ expectations of 44. A reading above 50 indicates growth. | The Markit/CIPS construction purchasing managers’ index (PMI) was 45.9 in July, down slightly from 46 in June but above economists’ expectations of 44. A reading above 50 indicates growth. |
| The report said the drop was driven by the steepest fall in the commercial building sector for more than six-and-a-half years, while civil engineering activity also tumbled for the first time in 2016. | The report said the drop was driven by the steepest fall in the commercial building sector for more than six-and-a-half years, while civil engineering activity also tumbled for the first time in 2016. |
| But it added that new orders had fallen at a slower pace in July than the month before, indicating some resilience from the sector despite concerns over the Brexit vote. | But it added that new orders had fallen at a slower pace in July than the month before, indicating some resilience from the sector despite concerns over the Brexit vote. |
| It comes on the same day builders’ merchants Travis Perkins said in a second-quarter update that it was suffering from weaker demand as a result of the EU referendum but cautioned that it is too early to say what the full impact will be. | It comes on the same day builders’ merchants Travis Perkins said in a second-quarter update that it was suffering from weaker demand as a result of the EU referendum but cautioned that it is too early to say what the full impact will be. |
| Concerns about an imminent slowdown in the UK economy were underscored on Monday when the PMI for Britain’s manufacturing industry showed the sector had slumped to its lowest level for more than three years, hitting 48.2 in July, down from 52.4 the month before, as it counted the cost of Britain’s decision to ditch the EU. | Concerns about an imminent slowdown in the UK economy were underscored on Monday when the PMI for Britain’s manufacturing industry showed the sector had slumped to its lowest level for more than three years, hitting 48.2 in July, down from 52.4 the month before, as it counted the cost of Britain’s decision to ditch the EU. |
| The string of reports pointing to a lacklustre performance from the UK economy has sharpened the focus on this Thursday’s interest rate announcement, with many economists expecting the Bank of England to cut the cost of borrowing and increase quantitative easing in a bid to shore up economic growth. | The string of reports pointing to a lacklustre performance from the UK economy has sharpened the focus on this Thursday’s interest rate announcement, with many economists expecting the Bank of England to cut the cost of borrowing and increase quantitative easing in a bid to shore up economic growth. |
| Tim Moore, senior economist at Markit, said: “July’s survey is the first construction PMI compiled entirely after the EU referendum result and the figures confirm a clear loss of momentum since the second quarter of 2016, led by a steep and accelerated decline in commercial building. | Tim Moore, senior economist at Markit, said: “July’s survey is the first construction PMI compiled entirely after the EU referendum result and the figures confirm a clear loss of momentum since the second quarter of 2016, led by a steep and accelerated decline in commercial building. |
| “Reduced volumes of new work to replace completed projects contributed to a fall in employment for the first time in just over three years. | “Reduced volumes of new work to replace completed projects contributed to a fall in employment for the first time in just over three years. |
| “UK construction firms frequently cited ongoing economic uncertainty as having a material negative impact on their order books. In particular, survey respondents noted heightened risk aversion and lower investment spending among clients, notwithstanding a greater number of speculative inquiries in anticipation of lower charges.” | “UK construction firms frequently cited ongoing economic uncertainty as having a material negative impact on their order books. In particular, survey respondents noted heightened risk aversion and lower investment spending among clients, notwithstanding a greater number of speculative inquiries in anticipation of lower charges.” |
| However, he said construction firms were seeing clients adopt a “wait and see approach” in July rather than cancelling upcoming projects altogether. | However, he said construction firms were seeing clients adopt a “wait and see approach” in July rather than cancelling upcoming projects altogether. |
| The report said that despite the uncertain business outlook for the sector, overall demand was resilient for housebuilding and infrastructure projects last month. | The report said that despite the uncertain business outlook for the sector, overall demand was resilient for housebuilding and infrastructure projects last month. |
| It added that the number of people working in the industry had dropped for the first time since May 2013, as there was not enough new work to replace finished projects. | It added that the number of people working in the industry had dropped for the first time since May 2013, as there was not enough new work to replace finished projects. |
| It also caused the availability of sub-contractors to climb at its fastest rate since September 2012 as demand for their services weakened. | It also caused the availability of sub-contractors to climb at its fastest rate since September 2012 as demand for their services weakened. |
| David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply (CIPS), said: “Though a marginal drop in the index compared to last month, the sector’s downhill course is a seriously disappointing development, with purchasing activity falling for the second consecutive month, and following another drop in new orders. | David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply (CIPS), said: “Though a marginal drop in the index compared to last month, the sector’s downhill course is a seriously disappointing development, with purchasing activity falling for the second consecutive month, and following another drop in new orders. |
| “The index also recorded the lowest business confidence since April 2013, and the fastest overall fall in output since June 2009. Commercial building bore the main brunt of this downturn with the largest decrease in activity for six and a half years.” | “The index also recorded the lowest business confidence since April 2013, and the fastest overall fall in output since June 2009. Commercial building bore the main brunt of this downturn with the largest decrease in activity for six and a half years.” |