Wednesday 20 June 2018

UK construction growth at year low

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Colm Kelpie

Colm Kelpie

UK construction growth has hit a year low on Brexit fears. Any fall-off in activity in the sector is bad news for Ireland, where exports of everything from timber and pre-cast concrete, to architectural and engineering services are heavily reliant on the huge British market.

Growth in Britain's construction firms fell unexpectedly in August, hit by an investment slump in the commercial sector, a survey showed yesterday.

Big Irish players like CRH, Kingspan and Grafton Group, as well as a host of smaller private firms, supply the UK construction market from bases here and subsidiary operations in Britain.

Countering more upbeat news about the economy last week, the Markit/CIPS Construction Purchasing Managers' Index (PMI) fell to 51.1 from 51.9 in July, closer to the 50 mark that indicates stagnation. A Reuters poll of economists had pointed to a reading of 52.0.

Monday's PMI underlined the uncertain outlook for an economy that has become increasingly difficult for the Bank of England to gauge.

A similar survey of manufacturers published on Friday had hinted at a strengthening of economic growth in the second half of the year.

Britain's economy had its slowest first half of the year since 2012 as households came under pressure from a big rise in inflation following the fall in sterling caused by the Brexit vote.

Civil engineering activity was broadly flat, while the commercial construction sector contracted at the fastest pace since July last year - just after Britain voted to leave the European Union.

"There were signs that UK construction firms are bracing for the soft patch to continue into this autumn, with fragile business confidence contributing to weaker trends for job creation and input buying during August," Tim Moore, an associate director at IHS Markit, said.

Survey compiler IHS Markit said the murky economic outlook for Britain weighed on commercial building, with clients delaying spending decisions or even scaling back projects.

Construction makes up around 6pc of British economic output. The Markit/CIPS survey for the UK services sector - which accounts for nearly 80pc of the UK economy - is due today. (Additional reporting Reuters)

Irish Independent

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