BTG Advisory provide comment on the implications of political and economic uncertainty for the UK construction market.
Activity in the industry remains high, but the mood of post-Brexit optimism has been tempered by the political challenge of a hung parliament, uncertainty in the macroeconomic environment, and the outcome of Brexit negotiations.
At 54.8 in June, down from 56.0 in May, which indicated the strongest expansion in business activity for 17 months, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered above the 50.0 no-change mark for the tenth consecutive month. However, the Index also indicated a weakening in momentum across all activity categories.
Tim Moore, Senior Economist at IHS Markit, commented: “The construction sector experienced a growth slowdown in June, largely reflecting weaker rises in commercial building and civil engineering activity. But residential construction work continued to increase at one of the fastest rates since the end of 2015.”
In a similar vein, the Construction Products Association (CPA) State of Trade Survey for 2017 Q2 reveals that UK construction product manufacturers experienced growth in sales and activity for the 17th consecutive quarter, but manufacturers’ optimism for the near term future is more subdued. (See chart)
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