Bad news for Irish firms as Brexit knocks UK construction
The UK building industry suffered its sharpest downturn in seven years in July, according to a survey yesterday which suggests Britain is at risk of recession following June's Brexit vote.
It's bad news for Ireland, where exports of everything from timber and precast concrete to architectural and engineering services are heavily reliant on the huge British market. Enterprise Ireland has indicated that construction materials is among the sectors most heavily reliant on UK exports, with as much as 90pc of sales in some segments made in Britain.
The Markit/CIPS UK Construction Purchasing Managers' Index (PMI) fell to 45.9 in July from 46.0 in June, the lowest reading since June 2009 and well below the 50 mark that divides growth from contraction.
The PMI survey, collated after the June 23 referendum, showed commercial construction dwindled and confidence flagged. There was a similarly downbeat report from manufacturers on Monday, contributing to growing evidence that business and consumer confidence took a hefty knock after Britons voted to leave the European Union.
Overall there was little in the construction PMI to challenge expectations that the Bank of England will cut interest rates tomorrow to a new record low and possibly revive its bond-buying programme.
"UK construction has been one of the hardest hit sectors following the Brexit result," said Julie Palmer, partner at consultancy Begbies Traynor.
"The rise in uncertainty will have led to a steep slowdown in investment activity and so, in the short term at least, UK construction will feel some pain."
Clients of construction companies had adopted a 'wait-and-see' approach to projects, rather than cancelling them outright or reducing their scope, the survey showed, with firms cutting staffing at the fastest rate since November 2012.
Commercial work, which accounts for almost a third of construction, contracted at the fastest rate since December 2009. Housebuilding declined for a second month. Prices paid for raw goods and materials for both construction and manufacturing rose at the sharpest pace since March 2015, which Markit linked to sterling's depreciation since the referendum. (Reuters)