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UK awaits services PMIs as manufacturing and construction disappoint

Construction Building 480

UK construction has followed manufacturing with disappointing June PMIs. Services PMIs released on Wednesday will round out the trio of surveys.

The construction index fell back to 54.8 in June after a jump to 56 in May. The slowdown was across all sectors.

EY Item Club chief economic adviser Howard Archer says the softer construction PMI points to the UK economy faltering as political uncertainties fuel business and consumer caution.

“The latest hard data show that construction output fell back 1.6 per cent month-on-month in April, so there will have needed to be decent growth in both May and June for the second quarter to see an expansion.”

Construction output grew 1.1 per cent quarter-on-quarter in the first quarter.

Archer notes that house building is holding up well, but could be pressurised by extended lacklustre housing market activity and subdued prices amid weakened consumer fundamentals.

“Construction companies will be hoping that recent Government measures aimed at boosting infrastructure and housebuilding have a material beneficial impact.”

Weaker domestic demand saw manufacturing PMIs released yesterday fall to an 11-month low, hitting 54.3 down from 56.3 in May.

Archer adds: “Much attention will be focused on Wednesday’s release of the PMI for the key services sector, which has been finding life generally much more challenging in 2017.”

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