UK Construction Sector Suffers Lowest Output since August 2016

Construction Workers at SunsetThe pace of commercial construction in the UK fell to its lowest rate in August since the same period in 2016, according to the Markit's purchasing managers' index.

The index showed that the sector’s reading fell to 51.1 from 51.9 in July. Some economists believe that Brexit played a major role in the decline, which indicated that the referendum vote continues to manifest its negative impact more than a year after it took place.

Index Reading

An index reading below 50 signifies growth in activity, yet the latest reading came as a surprise instead of good news. Analysts had expected the index to reach a reading of 52. Tim Moore, associate director at IHS Markit, said that civil engineering work manifested sluggish growth.

On the other hand, housing activity served as the only bright spot in the sector due to strong demand for new homes. The residential sector somehow keeps the industry afloat, yet jobs in other construction sectors have become fewer as companies received fewer new orders for the second month in a row.

Building Maintenance

Even as construction work hit a snag, it does not necessarily rule out the need for continued building maintenance in the UK. Companies will still need to conduct routine checks and get the services of building maintenance and repair specialists like the M&E Maintenance Solutions Ltd to prevent any untoward incidents, including the widely publicised accident at the Grenfell Tower in West London.

While continued maintenance work remains ideal, most companies are expected to let go of office projects and consequently affect demand for commercial space, according to Samuel Tombs, Pantheon Macroeconomics chief UK economist. This contingency measure would occur if negotiations for Brexit will remain slow.

Construction activity serves as a major economic indicator in the UK, which is why the government should hasten negotiations on Brexit to clear uncertainty and encourage builders to get back to work.