UK construction industry’s output at lowest level in 10 years amid Brexit concerns Measures in all three categories – commercial projects, civil engineering and house building – all fell at record rates

The UK’s construction industry has taken a battering due to Brexit uncertainty, as a measure of the sector’s output fell at its steepest rate month-on-month since 2009.

The Markit/CIPS UK Construction purchasing managers’ index (PMI) recorded a reading of 43.1 for June, down from 48.6 in May.

A reading above 50 indicates growth, while below represents contraction. Economists had predicted a more conservative reading of 49.2 for the past month.

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The monthly drop is the steepest reduction in overall construction output since April 2009. This marks the fourth time the sector has contracted in the past five months.

Brexit uncertainty

Measures in all three categories measured by the index’s compilers – commercial projects, civil engineering and house building – all fell at record rates amid Brexit uncertainty and weaker demand.

Tim Moore, associate director at IHS Markit, said the figures revealed “weakness across the board” for the construction sector.

He added: “Delays to new projects in response to deepening political and economic uncertainty were the main reasons cited by construction companies for the fastest drop in total construction output since April 2009.”

The report said firms had adopted a “wait-and-see” approach to spending decisions, putting a dampener on new work.

‘Delays in replacing staff’

One brighter spot in the data was for employment, as demand for construction staff remains relatively resilient following a large decline in May, when the survey showed the steepest fall in hiring since 2012.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “We are still a long way off the level of entrenchment seen in the last economic crisis, as payroll numbers remained relatively steady – any job cuts were just delays in replacing staff.”

Elsewhere, members the Federation of Master Builders warned that a no-deal Brexit could result in soaring material prices and lower workloads and enquiries.

Over half of those polled by the trade association said a failure to reach an agreement with the EU would hike up material prices, while just under a third said it would dampen enquiries.

A significant majority – 87 per cent – of construction workers said reducing VAT on repairs, maintenance and improvement could prevent an economic downturn later this year.