The UK’s construction sector is still contracting, although it has improved from an 85-month low of 45.9 in July to 49.2 in August, according to Markit’s purchasing managers’ index.

Construction firms in the UK have indicated a sustained reduction in business activity during August, but the decline was marginal and at softer levels than July.

The PMI survey reveals that new order volumes are moving closer to stabilisation with the least reduction last month since May, contributing to a rise in staffing levels in the industry.


Markit senior economist Tim Moore says: ‘The downturn in UK construction activity has eased considerably since July, primarily helped by a much slower decline in commercial building.

‘Construction firms cited a nascent recovery in client confidence since the EU referendum result and a relatively steady flow of invitations to tender in August.

‘However, the latest survey indicated only a partial move towards stabilisation, rather than a return to business as usual across the construction sector.’

Purchasing prices are rising at the fastest pace in more than five years as currency depreciation acts as a catalyst for higher charges for suppliers of construction materials.

Davy Research says the construction PMI reiterates the negative impact that Brexit-related uncertainty is having on the economy.

Housebuilders have slumped after retirement property expert McCarthy & Stone (MCS) reported fewer reservations and higher cancellation levels following the EU referendum.


Persimmon (PSN), Taylor Wimpey (TW.) and Berkeley (BKG) are trading up to 3% lower after rallying on news that UK manufacturing rebounded to a 10-month high.

Ibstock (IBST) is also 10% down after former private equity owner Bain Capital sold a 10% stake in the brick maker, signalling more bad news of the struggling sector.

However, it is reassuring that housing activity and commercial builders experienced the slowest contraction rate for three months and that business confidence is rebounding.

Issue Date: 02 Sep 2016