News Item: Political and Economic Uncertainty Blamed for Decline in Construction Projects

In June the UK construction sector went into it's steepest decline since the recession which followed the 2009 financial crisis.

The Construction Purchasing Managers’ Index* (PMI) survey score was 43.1, down from 48.6 in May. Not only is this the lowest figure since since April 2009, it's a sharp change from the 48.6 score of the previous month. Scores higher than 50 indicate growth, lower than 50 (which is has been for the past several months) suggest the sector is in decline. The PMI survey's measure of industry optimism is also low, as it has been for more than 6 months.

Comments from survey suggest the slowdown in work and spend is largely due to uncertainty about Brexit and what effect this may have on the economy. Other potential causes include delays to major projects and slowing in the housing sector (the largest decreate in three years). Perhaps a combination of all these gives the most accurate picture.

Last year construction contributed around £115 billion to the economy (about 6% of the total) but the larger manufacturing sector also showed sharp drops in productivity.

The PMI survey for the service sector (almost 80 per cent of the UK economy) was completed on 3rd of July and also showed evidence of decline with a score of 50.2 down from 51 in May.

* Operated by IHS Markit and The Chartered Institute of Procurement and Supply (CIPS UK)