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Construction sector dips ahead of EU referendum


The construction sector has slowed to its lowest level in three years

The construction sector has slowed to its lowest level in three years

The construction sector has slowed to its lowest level in three years

Growth in the UK's construction sector slowed to its lowest level for almost three years in April amid "clouds of uncertainty" ahead of the EU referendum.

The closely-watched Markit/CIPS construction purchasing managers' index (PMI) showed a reading of 52 last month, down from 54.2 in March and the weakest since June 2013.

A reading above 50 shows expansion.

It comes after PMI data on Tuesday showed a surprise contraction in manufacturing activity last month and adds to evidence that the EU referendum is taking its toll on the UK economy.

Official figures last week revealed the UK's economic growth slowed to 0.4% in the first quarter from 0.6% in the previous three months and economists are now expecting output to ease back further in the second quarter.

Tim Moore, senior economist at Markit and author of the survey, said: "UK construction firms reported their worst month for almost three years in April, meaning that the first quarter slowdown is unlikely to prove temporary. Softer growth forecasts for the UK economy alongside uncertainty ahead of the EU referendum appear to have provided reasons for clients to delay major spending decisions until the fog has lifted."

David Noble, group chief executive at the Chartered Institute of Procurement & Supply (CIPS), said "clouds of uncertainty" had dealt a blow to confidence in the construction sector.

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But the latest UK-wide survey contrasts somewhat with the latest Ulster Bank purchasing managers' index, which showed Northern Ireland business, including construction, is making the most of uncertainty around the EU referendum with output at an 18-month high in March.

Meanwhile, the latest national survey showed house building picked up slightly after a dire March, but saw one of the weakest rises in activity since early 2013.

The report also revealed a renewed drop in confidence in the sector, with the weakest positive sentiment over the outlook for nearly three years.

Construction firms reported a "general unwillingness to commit to new projects" among clients, according to the survey.