U.K. construction sector activity declines sharply in June

U.K. construction sector sees sharp loss of momentum in June, with business activity and incoming new work both falling at the most rapid rate for just over 10 years. The headline seasonally adjusted IHS Markit/CIPS UK construction activity index dropped sharply to 43.1 in June from May’s 48.6. The index has stayed below the 50 no-change mark for the fourth straight time in the past five months.

Furthermore, the latest reading hinted at the steepest drop in overall construction output since April 2009. All three broad categories of activity saw a fall in output in June. The fall in house building was the largest reported for three years, which construction companies attributed to softer demand conditions and concerns regarding the outlook for residential sales.

Commercial work dropped for the sixth straight month and continued to be the worst performing area of construction activity. The latest reduction in work on commercial building projects was the steepest since December 2009. Survey respondents often cited Brexit uncertainty and subsequent delays to project starts.

Civil engineering activity also dropped at a sharp rate in June, with the pace of contraction the fastest since October 2009. Anecdotal evidence implied that domestic political uncertainty, delays to new projects and longer wait times for infrastructure contract awards had all acted as a brake on business activity.

Demand for construction staff was comparatively resilient in June, with the latest survey pointing to only a marginal fall in workforce numbers. Where a fall in employment was reported, this was often linked to the non-replacement of voluntary leavers. Some firms noted that they had sought to retain staff in anticipation of a rebound in sales. Latest data indicated that overall business optimism towards the outlook for construction work remained subdued, with sentiment holding close to May’s seven-month low.

At 12:00 GMT the FxWirePro's Hourly Strength Index of United Kingdom was neutral at 18.7372 while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 110.285 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex