Sharp fall puts Construction Index back to 2013 levels

The UK Construction Purchasing Managers Index fell to 46.0 in June from 51.2 in May. The index has not fallen below 50 since April 2013 - above 50 denotes growth.

The figures may have been impacted by pre-referendum uncertainty, some pundits have argued, though of course the fall in the index cannot be blamed on the result of the vote, which took place at the end of the month, on June 23.

Professor Noble Francis, Economics Director at the Construction Products Association - which represents UK manufacturers and distributors of construction products and materials - 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.”