February 2, 2018 / 9:39 AM / 8 months ago

UK construction stagnates in January on political worries - PMI

LONDON (Reuters) - Britain’s construction sector came close to contracting for the first time since September last month as uncertainty linked to Brexit caused new orders to dry up, a survey showed on Friday.

FILE PHOTO: Construction cranes are seen on a building site in central London, Britain, July 31, 2017. REUTERS/Hannah McKay/File Photo

The IHS Markit/CIPS UK Construction PMI fell to 50.2 in January from 52.2 in December, well below a median forecast of 52.0 in a Reuters poll of economists.

“Survey respondents reported increased hesitance among clients to invest in new projects amid heightened concerns over the UK economic outlook,” Sam Teague, an IHS Markit economist, said.

Firms expected business to improve later in 2018 but the outlook depended on how Britain’s Brexit talks go, Teague said.

Prime Minister Theresa May wants to negotiate a deal with the European Union that avoids major new barriers to trade and investment, even as she comes under pressure from many members of her Conservative Party to resist the demands of Brussels.

Britain’s economy has generally fared better than expected at the time of the 2016 referendum decision to leave the EU. But much of that is thanks to a strong recovery in the global economy. Britain lagged its Group of Seven peers last year.

Construction comprises around 6 percent of British economic output. Official figures published last week showed the sector contracted in the fourth quarter of 2017 when it had its worst performance in more than five years.

A PMI for Britain’s manufacturing sector - which accounts for about 10 percent of the economy - showed the weakest growth in seven months in January.

A similar survey for the far larger services sector is due on Monday.

Finance minister Philip Hammond announced measures in November that he hopes will improve Britain’s poor record of house-building, which has helped push up house prices sharply.

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