Construction sector shows some recovery after bleak July

A move towards stabilisation but no return yet to business as usual
A move towards stabilisation but no return yet to business as usual

Britain’s construction industry showed signs of recovery last month, as output beat expectations and picked up from July’s seven-year low.

The closely-watched Markit/CIPS construction purchasing managers’ index (PMI) hit 49.2 in August, up from 45.9 in July and above economists’ expectations of 46.5.

A reading above 50 indicates growth.

Construction activity recorded its fastest fall since June 2009 in July as uncertainty over Britain’s decision to ditch the European Union triggered a steep fall in commercial building activity.

However, business activity only recorded a marginal fall in August, as new order volumes “moved closer to stabilisation”.

The report said the rate of contraction in housing activity and commercial building was the slowest for three months, while civil engineering was stable after falling in July.

The update follows a surprise swing in manufacturing output in August, notching up its highest monthly rise in a quarter of a century.

Tim Moore, senior economist at Markit, said the report only highlights “a partial move towards stabilisation” and not a return to “business as usual” for the construction sector.

“The downturn in UK construction activity has eased considerably since July, primarily helped by a much slower decline in commercial building.

“Construction firms cited a nascent recovery in client confidence since the EU referendum result and a relatively steady flow of invitations to tender in August.”

He said there were still widespread reports that Brexit uncertainty was dampening demand, with total new order volumes continuing to fall in August.