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Construction output reports its worst month in a decade

The UK construction sector experienced its steepest reduction in output in 10 years during June.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index slumped to 43.1 in June, down on 48.6 in May. Readings below 50 signal contraction.

The fall in house building was the largest reported for three years, while commercial work fell for the sixth consecutive month and civil engineering declined at the fastest pace since October 2009.

Anecdotal evidence suggested domestic political uncertainty, delays to new projects and longer wait times for infrastructure contract awards acted as brakes on business activity.

Lower workloads led to the largest drop in input buying since January 2010, though supply chain pressures persisted, reflecting shortages of stock among vendors. Longer wait times for plasterboard and insulation materials were frequently reported.

Duncan Brock, Group Director at CIPS, said: “Purchasing activity and new orders dropped like a stone in June as the UK construction sector experienced its worst month for a decade.

“This abrupt change in the sector’s ability to ride the highs and lows of political uncertainty shows the impact has finally taken its toll as new orders dried up and larger contracts were delayed again.

“The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years, which is frankly worrying news.”

Tim Moore, associate director at IHS Markit, said: “Greater risk aversion has now spread to the residential building sub-sector, as concerns about the near-term demand outlook contributed to a reduction in housing activity for the first time in 17 months.”

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