Output in Britain’s construction sector contracted has fallen to its lowest level in almost a year in February, as Brexit uncertainty is delaying firms’ decisions on building projects.
HIS Markit/CIPS UK construction purchasing managers index, (PMI) fell in February to 49.5 from 50.6 in January.
A reading below 50 indicates a contraction, and economist’s expectations of 50.5 were missed.
Tim Moore, economics associate director at IHS Markit, which compiles the survey said, “The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects.
“Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space.
“The fall in commercial work therefore hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.
“There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year. This leaves the construction sector increasingly reliant on large-scale infrastructure projects for growth over the year ahead.”
Howard Archer, chief economic adviser at EY ITEM Club said, “With the economy clearly continuing to struggle in the first quarter amid heightened Brexit uncertainties and slower global growth, after a marked slowdown in the fourth quarter of 2018, we now believe that the Bank of England is unlikely to hike interest rates before November.”
Archer said that central bank policy makers are “likely wait for some time before edging up interest rates from 0.75% to 1.00% as it will likely want to see sustained evidence that the UK economy is improving.”
Adding, “There is a genuine chance now that the Bank of England will sit tight on interest rates through 2019, especially if Brexit is delayed and extends the uncertainty.”