October 2, 2019 / 8:42 AM / 15 days ago

UK construction slump worsens as Brexit uncertainty deepens - PMI

LONDON (Reuters) - A downturn in British construction deepened last month, according to a survey on Wednesday that showed the commercial and civil engineering sectors contracting at the fastest in around 10 years ahead of Brexit.

Construction cranes are seen above a refurbished Mill building in the city centre of Manchester, Britain, February 23, 2019. REUTERS/Phil Noble/Files

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index fell to 43.3 from 45.0 in August, below all forecasts in a Reuters poll of 17 economists that had pointed to an unchanged reading.

Far below the 50 dividing line for growth, September’s reading was the second-worst since the financial crisis. Construction firms cut jobs at the fastest rate since December 2010, data company IHS Markit said.

Britain is due to leave the European Union on Oct. 31, and Prime Minister Boris Johnson has said he is prepared to leave without a deal if necessary, despite being ordered by parliament to seek a delay if he cannot negotiate acceptable terms.

Companies blamed escalating Brexit uncertainty and generally weak demand for hesitancy among their clients, the survey showed.

Overall, the data added to signs that businesses are struggling to make longer-term plans due to the risk of a disruptive no-deal Brexit in the coming years, although consumer spending has held up well.

“The commercial sector was a notable casualty in September, with building activity here falling at the fastest rate since April 2009, highlighting the damaging effects of project delays and belt-tightening,” IHS Markit economist Joe Hayes said.

“Forward-looking indicators suggest that businesses are bracing themselves for a protracted construction slump, with input purchasing and employment both falling at rates unsurpassed since 2010,” Hayes added.

Construction accounts for about 6% of British economic output, and official data on Monday showed that output in the sector shrank by 1.2% in the three months to June.

The IHS Markit/CIPS survey of the much larger services sector is due on Thursday.

Reporting by Andy Bruce; Editing by Catherine Evans

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