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You can find the current article at its original source at https://www.theguardian.com/business/live/2019/jul/02/london-house-prices-fall-brexit-slowdown-construction-pmi-business-live
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| UK construction output 'drops like a stone' as Brexit bites - business live | UK construction output 'drops like a stone' as Brexit bites - business live |
| (32 minutes later) | |
| With construction activity falling, it may be harder to get a job at a building firm. | |
| Bosses told Markit that there has been a “marginal” drop in workforce numbers, often due to “the non-replacement of voluntary leavers”. | |
| The pound has also dropped against the euro, to €1.116, close to its lowest level since January. | The pound has also dropped against the euro, to €1.116, close to its lowest level since January. |
| Sam Cooper, vice-president of Market Risk Solutions at Silicon Valley Bank, says investors are shunning sterling: | Sam Cooper, vice-president of Market Risk Solutions at Silicon Valley Bank, says investors are shunning sterling: |
| “The extremely disappointing construction PMI reading is further evidence that Brexit concerns are manifesting in economic data. | “The extremely disappointing construction PMI reading is further evidence that Brexit concerns are manifesting in economic data. |
| Sterling’s attraction continues to diminish as weak economic data paired with political uncertainty weigh on the value of the currency” | Sterling’s attraction continues to diminish as weak economic data paired with political uncertainty weigh on the value of the currency” |
| Economist Sam Tombs of Pantheon says Brexit uncertainty is having an increasingly painful impact on UK construction. | Economist Sam Tombs of Pantheon says Brexit uncertainty is having an increasingly painful impact on UK construction. |
| The slump in Markit's construction PMI in June points to a worrying step change in the impact of Brexit uncertainty on the economy. Builders unambiguous that Brexit/political risks are to blame for caution among clients. But don't panic, I'm sure Boris & co have a plan... pic.twitter.com/QKn9miX2RG | The slump in Markit's construction PMI in June points to a worrying step change in the impact of Brexit uncertainty on the economy. Builders unambiguous that Brexit/political risks are to blame for caution among clients. But don't panic, I'm sure Boris & co have a plan... pic.twitter.com/QKn9miX2RG |
| Only the “pathologically optimistic” observer could expect Britain’s construction sector to recover anytime soon, says Blane Perrotton, managing director of property consultancy and surveyors Naismiths. | Only the “pathologically optimistic” observer could expect Britain’s construction sector to recover anytime soon, says Blane Perrotton, managing director of property consultancy and surveyors Naismiths. |
| He says: | He says: |
| “This is less of a slide than a sledgehammer. After licking its wounds from a lean May, the construction industry has once again been ambushed by plummeting investor demand. | “This is less of a slide than a sledgehammer. After licking its wounds from a lean May, the construction industry has once again been ambushed by plummeting investor demand. |
| “In an industry that still bears the scars of the crash a decade ago, the news that output is once again falling as fast as it did in the dark days of 2009 will send a chill down many builders’ spines. | “In an industry that still bears the scars of the crash a decade ago, the news that output is once again falling as fast as it did in the dark days of 2009 will send a chill down many builders’ spines. |
| “Apart from a brief flurry of stockpiling in advance of March 29th – what should have been Brexit Day – the first half of 2019 has been grim across much of the construction sector. | “Apart from a brief flurry of stockpiling in advance of March 29th – what should have been Brexit Day – the first half of 2019 has been grim across much of the construction sector. |
| Simon Harvey of currency exchange firm Monex Europe agree that June’s construction PMI is much worse than feared. | Simon Harvey of currency exchange firm Monex Europe agree that June’s construction PMI is much worse than feared. |
| Massive miss in UK construction PMI which doubles down on yesterday's dismal manufacturing reading. UK Construction industry suffered its worst month in 10-years with LT investment being postponed due to Brexit, and a lot of the backlog worked through. | Massive miss in UK construction PMI which doubles down on yesterday's dismal manufacturing reading. UK Construction industry suffered its worst month in 10-years with LT investment being postponed due to Brexit, and a lot of the backlog worked through. |
| New orders fell by the most in 10 years, with slowing external demand also a concern. Housing activity falls to show the lowest reading since June 2016, reversing the expansionary trend. | New orders fell by the most in 10 years, with slowing external demand also a concern. Housing activity falls to show the lowest reading since June 2016, reversing the expansionary trend. |
| Today’s grim construction PMI report has hurt the pound, sending sterling to a two-week low of $1.261 against the US dollar. | Today’s grim construction PMI report has hurt the pound, sending sterling to a two-week low of $1.261 against the US dollar. |
| Michael Hewson of CMC Markets says the City is alarmed to see UK construction falling at the fastest rate since April 2009 -- during the last recession. | Michael Hewson of CMC Markets says the City is alarmed to see UK construction falling at the fastest rate since April 2009 -- during the last recession. |
| He explains: | He explains: |
| On the currencies front the pound is amongst the worst performers after a shocking miss in the latest construction PMI for June saw economic activity slide to 43.1, its weakest level since April 2009. There is no sugar-coating these numbers, they are awful. Far from seeing an improvement to 49.2, from 48.6, activity has collapsed with the home building sub component turning negative for the first time in 17 months. | On the currencies front the pound is amongst the worst performers after a shocking miss in the latest construction PMI for June saw economic activity slide to 43.1, its weakest level since April 2009. There is no sugar-coating these numbers, they are awful. Far from seeing an improvement to 49.2, from 48.6, activity has collapsed with the home building sub component turning negative for the first time in 17 months. |
| It would appear that the recent stalling of house prices is seeing a slowdown in this particular sector. New orders also fell sharply as the Brexit limbo puts companies off any imminent plans to make long term investments. It also calls into question the Bank of England thinking that a rate rise is more likely than a rate cut. | It would appear that the recent stalling of house prices is seeing a slowdown in this particular sector. New orders also fell sharply as the Brexit limbo puts companies off any imminent plans to make long term investments. It also calls into question the Bank of England thinking that a rate rise is more likely than a rate cut. |
| The news that Britain’s construction sector just suffered its worst month in a decade has alarmed commentators and investors. | The news that Britain’s construction sector just suffered its worst month in a decade has alarmed commentators and investors. |
| Here’s some snap reaction: | Here’s some snap reaction: |
| Pain of Brexit indecision felt across house building, commercial and civil engineering reports @IHSMarkitPMI June construction PMI at 43.1 down sharply from 48.6 previous month | Pain of Brexit indecision felt across house building, commercial and civil engineering reports @IHSMarkitPMI June construction PMI at 43.1 down sharply from 48.6 previous month |
| Seeing as big construction projects often overrun in terms of cost and time, is it possible the dreadful UK construction PMI report for June was as an overshoot of the 29 March UK departure date? #Brexit | Seeing as big construction projects often overrun in terms of cost and time, is it possible the dreadful UK construction PMI report for June was as an overshoot of the 29 March UK departure date? #Brexit |
| Wretched UK Construction PMI - weakest since 2009, hammered by Brexit uncertainty"The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years which is frankly worrying news." -@cipsnews pic.twitter.com/zAtHnI0GBg | Wretched UK Construction PMI - weakest since 2009, hammered by Brexit uncertainty"The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years which is frankly worrying news." -@cipsnews pic.twitter.com/zAtHnI0GBg |
| Construction PMI at its lowest since April '09, note: a reading below fifty suggests the construction sector is in contraction. Makes that 300,000 news homes a year target a tad tricky pic.twitter.com/z93CeP59gH | Construction PMI at its lowest since April '09, note: a reading below fifty suggests the construction sector is in contraction. Makes that 300,000 news homes a year target a tad tricky pic.twitter.com/z93CeP59gH |
| Today’s PMI report shows clearly that UK construction activity has taken a nasty tumble in the last few months: | Today’s PMI report shows clearly that UK construction activity has taken a nasty tumble in the last few months: |
| Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, says building firms are trapped in “quicksand” by political uncertainty: | Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, says building firms are trapped in “quicksand” by political uncertainty: |
| “Purchasing activity and new orders dropped like a stone in June as the UK construction sector experienced its worst month for a decade. | “Purchasing activity and new orders dropped like a stone in June as the UK construction sector experienced its worst month for a decade. |
| “This abrupt change in the sector’s ability to ride the highs and lows of political uncertainty shows the impact has finally taken its toll as new orders dried up and larger contracts were delayed again. The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years which is frankly worrying news | “This abrupt change in the sector’s ability to ride the highs and lows of political uncertainty shows the impact has finally taken its toll as new orders dried up and larger contracts were delayed again. The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years which is frankly worrying news |
| Tim Moore, associate director at IHS Markit, says building companies are suffering from the lack of clarity over Britain’s future: | Tim Moore, associate director at IHS Markit, says building companies are suffering from the lack of clarity over Britain’s future: |
| Delays to new projects in response to deepening political and economic uncertainty were the main reasons cited by construction companies for the fastest drop in total construction output since April 2009. While the scale of the downturn is in no way comparable that seen during the global financial crisis, the abrupt loss of momentum in 2019 has been the worst experienced across the sector for a decade. | Delays to new projects in response to deepening political and economic uncertainty were the main reasons cited by construction companies for the fastest drop in total construction output since April 2009. While the scale of the downturn is in no way comparable that seen during the global financial crisis, the abrupt loss of momentum in 2019 has been the worst experienced across the sector for a decade. |
| “Greater risk aversion has now spread to the residential building sub-sector, as concerns about the near-term demand outlook contributed to a reduction in housing activity for the first time in 17 months. | “Greater risk aversion has now spread to the residential building sub-sector, as concerns about the near-term demand outlook contributed to a reduction in housing activity for the first time in 17 months. |
| “Construction companies reported a continued brake on commercial work from clients opting to postpone spending, with decisions on new projects often pending greater clarity about the path to Brexit. Latest data meanwhile indicated another sharp fall in civil engineering, which also reflected delayed projects and longer wait times for contract awards. | “Construction companies reported a continued brake on commercial work from clients opting to postpone spending, with decisions on new projects often pending greater clarity about the path to Brexit. Latest data meanwhile indicated another sharp fall in civil engineering, which also reflected delayed projects and longer wait times for contract awards. |
| UK builders also reported that new orders dropped at the fastest rate in over 10 years, while demand for construction products and materials fell at the sharpest pace since the start of 2010. | UK builders also reported that new orders dropped at the fastest rate in over 10 years, while demand for construction products and materials fell at the sharpest pace since the start of 2010. |
| Britain’s construction sector suffered as “sharp drop in momentum” last month, says data firm Markit. | Britain’s construction sector suffered as “sharp drop in momentum” last month, says data firm Markit. |
| In a very worrying healthcheck on the construction sector, Markit has found that business activity and incoming new work both fell at the fastest pace for just over 10 years. | In a very worrying healthcheck on the construction sector, Markit has found that business activity and incoming new work both fell at the fastest pace for just over 10 years. |
| Housebuilding, commercial construction and big civil engineering work all contracted during the month -- a bad sign for the whole construction sector. | Housebuilding, commercial construction and big civil engineering work all contracted during the month -- a bad sign for the whole construction sector. |
| Builders across the country blamed “risk aversion among clients in response to heightened political and economic uncertainty.” | Builders across the country blamed “risk aversion among clients in response to heightened political and economic uncertainty.” |
| That suggests people are simply unwilling to take risks while they don’t know how the Brexit crisis will be resolved. | That suggests people are simply unwilling to take risks while they don’t know how the Brexit crisis will be resolved. |
| This has dragged the IHS Markit/CIPS UK Construction Total Activity Index down to just 43.1 in June, down sharply from 48.6 in May. Any reading below 50 shows a contraction, and this shows the steepest reduction in overall construction output since April 2009. | This has dragged the IHS Markit/CIPS UK Construction Total Activity Index down to just 43.1 in June, down sharply from 48.6 in May. Any reading below 50 shows a contraction, and this shows the steepest reduction in overall construction output since April 2009. |
| The fall in house building was the largest reported for three years, which construction companies linked to weaker demand conditions and concerns about the outlook for residential sales. | The fall in house building was the largest reported for three years, which construction companies linked to weaker demand conditions and concerns about the outlook for residential sales. |
| NEWSFLASH: Construction output in the UK has fallen at the steepest rate since April 2009! | NEWSFLASH: Construction output in the UK has fallen at the steepest rate since April 2009! |
| That’s according to data firm Markit, and its latest survey of purchasing managers. More to follow..... | That’s according to data firm Markit, and its latest survey of purchasing managers. More to follow..... |