UK Construction PMI Confirms Slip in Optimism Amongst Builders

The UK's construction sector has seen a dip in optimism and overall activity in the month of June.

IHS Markit and the CIPS report that their Construction PMI series revealed weaker growth momentum across the UK construction sector, with business activity, new work and employment all expanding at slower rates than in May.

The PMI read at 54.8, a shade lower than analyst expectations for a reading of 55.

This represents a slowdown on the previous month’s reading of 56, but is still indicative of solid expansion in the sector.

On the back of last month's reading we reported that the UK economy was “entering a period of strength” as May's reading of 56 was well ahead of the 52.7 forecast by economists.

So there has been a big adjustment higher in expectations for the sector which remains in expansion territory.

"The housing sector continued to have the most get-up-and-go with the second fastest rise since December 2015, leaving the other sectors lagging behind," says Duncan Brock, Director of Customer Relationships at the CIPS.

However, optimism regarding the outlook has fallen which draws questions on future activity.

“The construction sector’s confidence took a knock this month as optimism fell to its lowest reading in 2017 and clients became more restrained in placing new orders. Respondents cited continuing uncertainty in the run up to the election and Brexit negotiations for the hesitancy," adds Brock.

That said, some uncertainty has since been wiped away as Theresa May has formed a Government that can last if the Conservative party shows discipline. This should provide some clarity for businesses over the next five years.

Of course Brexit still looms large and this will keep the industry below full-throttle until the final outcome becomes clear.