UK construction stuck in 'devastating' downturn as Brexit deters building projects

Tom Belger
Finance and policy reporter
UK construction is struggling. Photo: PA

The UK construction industry is stuck in a “devastating” downturn, with new figures showing the sector’s output shrinking further in September.

The sector saw its second-fastest decline in building activity in more than a decade, with employment levels and new orders both sinking as Brexit deters investment in building work.

The headline figure in the latest purchasing managers’ index (PMI) in construction was 43.3 for overall output, down from 45 in August.

Figures below 50 indicate a decline in trading conditions on the index, compiled by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS). Readings above 50 indicate growth.

READ MORE: UK factory growth shrinks in longest downturn since financial crisis

Duncan Brock, group director at the CIPS, said: "The construction sector offered another devastating result in September with the second fastest fall in new orders since March 2009 and the financial crisis.

“After a relentless six-month decline in order books driven by Brexit uncertainty and political indecision, this is hardly surprising."

The report added: “The UK construction sector remained firmly stuck in a downturn at the end of the third quarter.

“A historically steep drop in new orders was also registered, while firms trimmed employment at the fastest rate since the end of 2010.”

READ MORE: The UK industries set to be hit hardest by Brexit

Activity dropped across the sector, with commercial work declining most but civil engineering and residential construction both also in negative territory.

It comes a day after figures showed UK factory production shrank for a fifth month in a row in September.

The PMI figures for UK factories showed them now facing the longest manufacturing downturn since the financial crisis, ringing fresh alarm bells over the health of the wider UK economy.

Similarly bleak manufacturing figures were released on Tuesday for eurozone countries, with manufacturing contracting at its steepest rate in seven years in September.