U.K. Construction Shrinks at the Fastest Pace in Seven Yearsby
Manufacturing also slumped in July, Markit survey showed
BOE policy makers forecast to cut interest rate on Thursday
U.K. construction shrank the most since the financial crisis in July, with companies citing uncertainty related to Brexit for the continued weakness.
Markit Economics said its Purchasing Managers Index for construction activity slipped to 45.9 from 46 in June. That’s the lowest since June 2009, when the economy was last in a recession. All three sectors -- housing, commercial and civil engineering -- recorded sub-50 readings, indicating contraction.
The survey comes as Bank of England policy makers meet to discuss the outlook and consider the stimulus they may need to prop up the economy. A Markit report on Monday showed manufacturing slumped more last month than initially estimated. A final reading for services in July is due on Wednesday.
“Firms frequently cited ongoing economic uncertainty as having a material negative impact on their order books,” said Markit Economist Tim Moore. “In particular, survey respondents noted heightened risk aversion and lower investment spending among clients.”
The July construction index was stronger than the reading of 44 forecast by economists. Markit said there were some reports that demand was “more resilient than expected given the uncertain business outlook.” There were also signs that the sharp fall in sterling is pushing up imported-material costs.
The BOE’s Monetary Policy Committee will announce its decision on Thursday, and analysts anticipate an interest-rate cut along with some additional measures to support demand.