UK construction PMI unexpectedly falls in August

The report from IHS Markit and Chartered Institute of Procurement & Supply (CIPS) showed that activity in the construction sector of the UK’s economy in August declined for the fourth consecutive month and at a slightly steeper rate than in July.

According to the report, the Markit/CIPS Purchasing Managers' Index (PMI) for the UK’s construction sector fell to 45.0 in August from an unrevised 45.3 in July.

Economists had forecast the indicator to increase to 45.9. The 50 mark divides contraction and expansion.

According to the report, the new work recorded the sharpest reduction since March 2009. However, despite a sustained reduction in new orders, employment trends were relatively resilient during August. The latest survey pointed to only a marginal decline in staffing levels, with the rate of decline the slowest since the downturn in payroll numbers began in April. Meanwhile, business optimism slid for the second month running in August, with the degree of positive sentiment the weakest since December 2008. On the price front, input cost inflation moderated to its lowest since March 2016.

Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey, noted: “Domestic political uncertainty continued to hold back the UK construction sector in August, with survey respondents indicating that delays to spending decisions had contributed to the sharpest fall new work for over 10 years.”