Decline in UK construction gathers pace in December: PMI

LONDON (Reuters) – The downturn in UK construction industry deepened in December, driven by the sharpest drop in civil engineering activity since 2009, a survey showed on Friday, underscoring the economy’s frailties at the end of last year.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) fell to 44.4 from 45.3 in November, below all forecasts in a Reuters poll that had pointed to an improved reading of 45.9.

The survey was conducted between Dec. 5 and 20, straddling Prime Minister Boris Johnson’s landslide election win on Dec. 12.

Investors are watching for signs that Johnson’s victory has lifted worries about political stability in Britain.

For now, most gauges of the economy look downbeat.

IHS Markit, a data company, published a survey on Thursday showing output in Britain’s manufacturing sector fell at the fastest rate in seven years in December.

It said its construction survey showed activity fell particularly hard in civil engineering and also declined in the housebuilding and commercial sectors.

Tim Moore, economics associate director at IHS Markit, said:

“Brexit uncertainty and spending delays ahead of the general election were once again the most commonly cited factors highlighted by firms experiencing a drop in construction activity.”

But some forward-looking figures pointed to better days ahead, he said.

The survey’s gauge of business expectations hit a nine-month high in December.

Moore said:

“Survey respondents cited confidence that a more predictable domestic political landscape and clarity on Brexit could deliver a much-needed boost to clients’ willingness to spend in 2020.”

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