UK construction PMI hits 11-month lows in July, a big miss on expectations

The construction sector activity in the UK economy accelerated its pace of decline in July and arrived much weaker than markets’ expectations, a fresh report from Markit Economics showed on Wednesday.

The final Purchasing Managers' Index (PMI) in the UK dropped to 51.9 points in July, after having booked 54.8 points in June. Markets had predicted a 54.5 reading.

Key Points:

Weakest construction performance since August 2016

Commercial work falls at fastest pace for 12 months

New orders decline, leading to softer job creation in July

Tim Moore, Senior Economist at IHS Markit and author of the Markit/CIPS Construction PMI®, noted: “July data reveals a growth slowdown in the UK construction sector, mainly driven by lower volumes of commercial development and a loss of momentum for house building. Weaker contributions from the cyclically sensitive areas of construction activity more than offset resilience in the civil engineering sector. “Worries about the economic outlook and heightened political uncertainty were key factors contributing to subdued demand. Construction firms reported that clients were more reluctant to spend and had opted to take longer in committing to new projects.”