Construction output slumps to seven-year low on Brexit fears
Construction output plummeted in June as firms held off major projects due to uncertainty ahead of the EU referendum, fresh data has shown.
The closely-watched purchasing managers' index (PMI) for the sector came in at its worst level for seven years this morning, plunging from 51.2 in May to 46 on an index where scores below 50 mark contraction.
Markit, which compiles the data with the Chartered Institute of Procurement and Supply, said there was a "steep decline in residential building", which fell into decline for the first time in more than three years, dragging the sector down and raising fears about a post-referendum slowdown.
Analysts did not hold back in their assessment of the survey. "This is an absolutely dire survey that fuels serious concern over the construction sector," said Howard Archer of IHS Global.
"UK construction is truly in the doldrums, if today’s PMI reading is anything to go by. A seven-year low for the construction PMI reading highlights the fact that many firms have seen investment ground to a halt both before and after the Brexit vote," said Joshua Mahony at IG.
"Firms are at the sharp end of domestic economic uncertainty and jolts to investor sentiment, so trading conditions were always going to be challenging in the run-up to the EU referendum," said Tim Moore, senior economist at Markit.
"However, the extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook."
Moore added over 80 per cent of responses to the survey were received before the outcome of the EU referendum, implying "the ensuing political turmoil will hit construction spending decisions for some time to come".