British construction activity, which has been consistently shrinking for six months, now records the fastest fall since the 2009 financial crisis. Brexit worries and a general economic slowdown are being considered as the reason behind the declining growth.
The IHS Markit/CIPS construction PMI rose to 44.2 in October from 43.3 in September, roughly in line with economists’ forecasts, but this was still the third-lowest reading since 2009 and pointed to a fall in output. “UK construction companies experienced a downturn in business performance during October as political uncertainty and subdued economic conditions again combined to hold back sales,” IHS Markit economist Tim Moore said.
Construction companies reported the seventh successive fall in new work, ordered less raw materials and did not replace staff who quit. Official data showed construction output rose by 2.4% in the 12 months to August, the most recent figures available, but last month smaller housebuilders reported the weakest demand since 2013. Britain had been due to leave the European Union on Oct. 31, but Brexit was delayed for the third time this year after Prime Minister Boris Johnson failed to get an exit deal through parliament in time. House building dropped off in October at the fastest rate since June 2016, the same month as the referendum that set Brexit in motion, while civil engineering projects declined at the fastest rate since October 2009.
Only a partial levelling-off in the rate of decline in commercial work stopped the index as a whole hitting fresh lows. “There are clear signs that construction firms are positioning for an extended soft patch for project starts, as highlighted by a further decline in purchasing volumes and another month of cuts to workforce numbers,” Moore said.
