UK construction sector declines at slowest rate in 18 months

The seasonally adjusted CIPS/Markit Construction Purchasing Managers’ Index (PMI®) was 47.7 in August, up from 47.0 in July and 44.5 in June.

A figure below 50 indicates contraction. August’s figure make it the 18th consecutive month the construction sector has contracted.

All of the three sub-sectors continued to report reductions in activity, although the rate of decline was only marginal within the commercial sub-sector and slowed on the previous month’s data. The housing sub-sector recorded a marked easing in the rate of contraction posted in July. In contrast, the fall in activity registered in the civil engineering sector worsened during the month.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said:

“Though August saw a reduction in the rate of deterioration in the construction sector, it is still the sick man of the UK economy. Far from seeing signs of a return to growth, the sector remains stuck in an unprecedented eighteen month period of contraction”.

Press Release: Markit Economics [PDF]

Note: The index is a “diffusion index”, it is calculated by adding together the percentage of respondents that reported an improvement plus half of the percentage that reported no change. Results will vary around the 50.0 “no-change” level. Readings above 50.0 signal an improvement, readings below 50.0 a deterioration. The greater the divergence from 50.0, the greater the rate of change anticipated by respondents.

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