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Construction PMI: Industry decline slows in August – but fails to keep pace with upbeat manufacturing figures

William Turvill
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July's construction PMIs hit an 85-month low (Source: Getty)

The UK construction industry's decline continued in August – but the pace slowed significantly on July, figures out today showed.

The construction purchasing managers’ index (PMI), which is closely watched by policymakers at the Bank of England, hit 49.2 in August.

The seasonally-adjusted Markit/CIPS figure remained below the 50 threshold (any figure above which denotes growth) for the third consecutive month, but was an improvement on July’s 45.9, which marked an 85-month low.

Read more: Pound surges as manufacturers smash expectations

The improvement between August and July failed to match growth in the UK’s manufacturing industry, in which Markit’s PMI jumped to 53.3.

“The downturn in UK construction activity has eased considerably since July, primarily helped by a much slower decline in commercial building,” said Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI.

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

"There were still widespread reports that Brexit uncertainty had dampened demand and slowed progress on planned developments, especially in relation to large projects. As a result, total new order volumes continued to fall during August, which stands in contrast to the three-year run of sustained growth seen prior to May 2016.

"Despite another month of reduced output, the latest figures can be viewed as welcome news overall after a challenging summer for the construction sector. The move towards stabilisation chimes with the more upbeat UK manufacturing PMI data for August, and provides hope that the near-term fallout from Brexit uncertainty will prove less severe than feared."

Read more: London businesses hardest hit in latest PMI figures as employment falls

Chris Williamson, IHS Markit's chief business economist, added:

UK construction activity fell for a third successive month in August as the industry goes through its toughest spell since 2009. While the sector saw a welcome easing in the rate of decline, uncertainty about the impact of Brexit remains widespread and confidence low by historical standards.

The rise in the construction PMI nevertheless adds to the welcome news provided by yesterday’s rebound in the manufacturing PMI to suggest that the risk of imminent recession has fallen considerably.

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