UK building survey shows sharp slide

UK construction shrank the most since the financial crisis in July, with companies citing uncertainty related to Brexit for the continued weakness.

Markit Economics said its Purchasing Managers Index for construction activity slipped to 45.9 from 46 in June.

That’s the lowest since June 2009, when the economy was last in a recession. All three sectors - housing, commercial and civil engineering - recorded sub-50 readings, indicating contraction.

The survey comes as Bank of England policymakers announced a rate cut and new measures to prop up the economy. A Markit report showed manufacturing slumped more last month than initially estimated.

A final reading for services in July is due next week. “Firms frequently cited ongoing economic uncertainty as having a material negative impact on their order books,” said Markit Economist Tim Moore.

“In particular, survey respondents noted heightened risk aversion and lower investment spending among clients,” Mr Moore said.

The July construction index was stronger than the reading of 44 forecast by economists. Markit said there were some reports that demand was “more resilient than expected given the uncertain business outlook”.

There were also signs the sharp fall in sterling is pushing up imported material costs. The UK construction survey will be closely scrutinised here.

A survey of Irish purchasing managers by Investec Ireland here showed a drop in output from Irish factories after the UK’s vote to leave the EU.