Markit/CIPS UK Construction PMI released for June

June sees weakest construction PMI performance in seven years.

CPA says figures “highlight the impact of uncertainty” around the construction sector.

The Markit/CIPS UK Construction PMI released for June has revealed that construction output fell at its fastest rate since June 2009.

The UK construction PMI for June dropped to 46.0 from May’s figure of 51.2. This was the first time that figure fell below the 50.0 threshold for growth since April 2013.

The worst performing sector was private housing, recording its biggest fall since December 2012. Commercial building work also posted one its weakest performance in over six years.

Civil engineering remained relatively steady in June.

The report suggests that the lack of activity was the direct outcome of weakening order books and a shortage of new work to replace completed projects.

In terms of confidence within the industry, optimism was recorded at its lowest level since June 2013.

Once again, uncertainty surrounding the EU referendum was cited as a key factor in the hesitancy to push ahead with new projects, coupled with insecurity about the general economic outlook.

Professor Noble Francis, Economics Director at the Construction Products Association (CPA), commented:  “This was a very sharp fall in the Markit/CIPS for construction activity in June overall and particularly in private housing and commercial, two of the largest sectors.

“In terms of what we have seen within the industry, commercial activity in central London still continues apace and there is also still a lot of activity in cities like Birmingham and Manchester.  The uncertainty prior to the referendum, however, has had an impact on new contracts signed, especially for smaller projects.

“In terms of housing, private house building continues but we are seeing evidence that this same uncertainty has had an impact on new housing starts.

“Infrastructure activity was broadly flat, which is not surprising as it has a longer lead in time, so the majority of work occurring in this sector is on large projects based upon contracts signed in 2014 and 2015.

“Our own surveys in the months before the vote showed that uncertainty around the event was dampening business confidence and investment across the industry.  Though today’s PMI figures were largely generated before 23 June, it will serve to highlight the impact of uncertainty on UK construction whilst government formulates a plan ahead.”

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