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‘Distressing decline’: UK construction sector contracts again

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‘Distressing decline’: UK construction sector contracts again
A construction worker works on a development site in London on August 17, 2016 From computers and cars to carpets and food, Britain's decision to leave the EU is beginning to hit consumers in the pocket, having already spread uncertainty through the property market. There are fears over the UK housing market, but deflation is more of a concern than price rises in this key sector. Figures released Monday showed that residential rents for new lets in London had fallen for the first time in six years. In addition, homeowners have seen the value of their property rise on average by just 2.1 percent in the year up tol August, a slowdown from the breakneck growth of recent years, according to property website Rightmove. / AFP / DANIEL LEAL-OLIVAS (Photo credit should read DANIEL LEAL-OLIVAS/AFP via Getty Images)

The UK construction sector shrank once again in October, survey data has shown, with civil engineering suffering its worst month in a decade as Brexit uncertainty continued to plague the industry.

Read more: UK economy to hit decade low even with Brexit deal, report warns

The construction purchasing managers’ index (PMI) – a gauge of the health of the sector – registered 44.2 in October, up from 43.3 in September, survey data from IHS Markit and the Chartered Institute of Procurement & Supply (Cips) showed.

A score of below 50 indicates contraction, meaning the construction sector is in sustained decline. The October reading was not far off the 10-year low seen in June.

The pound sank after the data was released. It was 0.17 per cent down against the dollar by 10.15am UK time to buy $1.292.

Civil engineering – the construction of things like roads and bridges – was the worst-performing area, with business activity falling at the sharpest pace in 10 years.

“Construction companies noted that client demand remained subdued in response to domestic political uncertainty and the economic backdrop,” Cips and data firm IHS Markit said.

Cips group director Duncan Brock added: “With a fall in civil engineering not seen for a decade and the biggest drop in housebuilding since 2016, it appears that strength in the sector is seeping away.”

“Jobs hiring suffered as businesses unsure of the government’s next steps held back on their development plans.”

Commercial construction – the building of things like offices and shops – fell for the tenth month running.

Max Jones of Lloyds Bank’s construction department said: “Commercial continues to feel soft. While larger contractors are still boosted by buoyant activity in cities like Birmingham and Manchester, lower down the supply chain life is tough.”

Construction companies remained pessimistic in October, with business optimism among the weakest since 2012.

Read more: UK public spending set to hit 1970s levels after election, think tank says

Brock said that with a General Election approaching, “all eyes will be on the new administration” for how they plan to “pull the sector out of its ditch”.

(Image credit: Getty)