Economy

PMI inches up to 52.5 points in August

PMI inches up to 52.5 points in August”

The IHS Markit/CIPS construction purchasing managers' index fell to 51.1 from 51.9 the month before, below expectations for an uptick to 52.0 and pointing to the weakest overall United Kingdom construction performance since August 2016.

Housebuilding was the only construction sector to generate significant growth during August, the PMI showed.

"Admittedly, the decline in the PMI partly reflected a sharp fall in the civil engineering activity index to just 50.2 in August, from 54.0 in July. We need to see the government deliver structural reforms which focus on broadening the skills base - giving greater consideration to the role that women and apprentices can play - particularly whilst a question mark hovers over the heads of our European Union migrant construction workers, who make up such a crucial part of our workforce". This points to only marginal expansion.

There were also signs of a sustained soft patch ahead, with new business volumes falling for the second month running. Meanwhile, civil engineering activity was essentially flat. It's particularly unsettling to see that employment numbers rose at the slowest pace in over 12 months. This was reported to be the effect of reduced business investment amid increased uncertainty.

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.

Activity in the United Kingdom construction sector unexpectedly declined in August, to its lowest level in a year, according to data released on Monday.

"This good fortune in prices is unlikely to continue as suppliers scrabble to match the demand for an increasing number of materials in short supply and delivery times lengthened". Although total new orders continued to decline, the rate of contraction softened against a backdrop of rising exports.

Cost pressures were the weakest since September 2016.

The construction sector had a disappointing Q2 with the Office for National Statistics reporting that output contracted 1.3% quarter-on-quarter, although this did follow an expansion of 1.1% in Q1. The latest data shows that construction output fell 0.1% month-on-month in June, which was a third successive fall.



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