UK construction PMI returns to contraction in Sept, a big miss on expectations

The construction sector activity in the UK economy extended its downward spiral in September and entered into contraction territory for the first time in thirteen months, a fresh report from Markit Economics showed on Tuesday.

The final Purchasing Managers' Index (PMI) in the UK dropped sharply to 48.1 points in September, after having booked 51.1 points in August. Markets had predicted a 50.8 reading.

Key Points:

Business activity falls for first time in 13 months

Sharpest drop in civil engineering work since April 2013

New orders and input buying drop in September

Tim Moore, Senior Economist at IHS Markit and author of the Markit/CIPS Construction PMI®, noted: “A shortfall of new work to replace completed projects has started to weigh heavily on the UK construction sector. Aside from the soft patch linked to spending delays around the EU referendum, construction companies have now experienced their longest period of falling workloads since early-2013. Fragile client confidence and reduced tender opportunities meant that growth expectations across the UK construction sector are also among the weakest for four-and-a-half years.”