Private housebuilding was the only area of construction work that grew in August © Bloomberg
Growth in Britain’s construction sector slid to its weakest level in a year in August, as businesses avoided making new investments, according to a survey of purchasing managers working in the industry published on Monday.
The IHS Markit construction purchasing managers’ index fell to 51.1 in August, down from 51.9 in July. Anything above 50 is said to indicate expansion in the sector. PMIs are not a direct measure of growth, but are often thought to be a good indicator of what is happening in the economy.
Respondents to the IHS Markit/Cips survey reported an increase in private housebuilding work, which has been supported by the government’s Help To Buy equity loan scheme. Help to Buy enables first-time buyers to purchase new homes with deposits of only 5 per cent, using an equity loan from the government for 20 per cent of the home’s value outside London and 40 per cent of the home’s value in the capital.
But private housebuilding was the only area of construction work that grew in August, according to the survey. Civil engineering stagnated during the month, while commercial work, including the construction of office buildings, dropped at the fastest pace since July 2016.
Tim Moore, an associate director at IHS Markit, said: “Survey respondents noted that subdued business investment and concerns about the UK economic outlook had led to a lack of new work to replace completed projects, especially in the commercial building sector.
“There were signs that UK construction firms are bracing for the soft patch to continue into this autumn, with fragile business confidence contributing to weaker trends for job creation and input buying during August.”
The figures follow official estimates of business investment, published last month, that showed capital spending by businesses had stagnated in the year since the EU referendum. Mark Carney, governor of the Bank of England, also warned last month that persistent uncertainty over the UK’s future relationship with the EU is holding back business investment and household spending.
According to Office for National Statistics figures published last month, output in the construction industry declined by 1.3 per cent in the second quarter of 2017 due to a decline in new commercial work.
Monday’s figures come after a corresponding survey of purchasing managers in the UK manufacturing sector showed that industry expanded at the strongest pace in four months during August. The IHS Markit manufacturing purchasing managers’ index rose to 56.9 during the month, up from 55.1 during July.