UK construction activity disappoints in August, survey shows

Growth in activity across the UK’s construction sector cooled more than forecast last month, hitting its weakest point in a year, according to a survey of industry executives released on Monday.

The IHS Markit UK construction purchasing managers’ index slipped to 51.09 in August from 51.9 the previous month. That came in shy of economist expectations of 51.9, according to a FactSet poll. Readings above 50 point to expansion, while those below indicate contraction.

“August survey data indicated that the UK construction sector continued to experience a slowdown this summer. Reduced levels of commercial work were a key source of weakness, which offset robust growth in residential building,” Markit said.

Results from the commercial building industry were particularly disappointing, with activity contracting at its swiftest pace since July 2016.

“Survey respondents noted that subdued business investment and concerns about the UK economic outlook had led to a lack of new work to replace completed projects, especially in the commercial building sector,” said Tim Moore, associate director at IHS Markit.

The data may add to worries about business investment taking a hit as a result of the fragile Brexit talks between the UK and the EU.

“The marked slowing in construction activity since May clearly points to heightened economic, political and Brexit uncertainties fuelling clients’ caution over committing to new projects,” said Howard Archer, chief economic adviser at EY ITEM Club. “A poor survey that suggests the construction sector will be of little – if any – help to UK GDP growth in the third quarter.”