UK construction industry contracted at the fastest pace in 6 years.
The Purchasing Managers’ Index fell from 51.2 in May to 46 in June, below the 50.7 predicted by economists surveyed before the report, Markit Economics reported in London on Monday.
According to Markit, over 80 percent of the survey were collected prior to the June 23 referendum, adding to evidence that the vote on Britain’s European Union membership weigh on residential building even before Brexit.
Some of the managers surveyed said clients were reluctant to commence new contracts ahead of the EU referendum — “weak economic outlook amid uncertainty in the run-up to Brexit was also a factor,” Markit said.
“Construction firms are at the sharp end of domestic economic uncertainty and jolts to investor sentiment, so trading conditions were always going to be challenging in the run-up to the EU referendum,” said Tim Moore, an economist at Markit. “However, the extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook.”
This report further raises the possibility of the Bank of England introducing additional monetary easing policy this summer — an effort to curtail the effect of Brexit on the economy.
Although, manufacturing output unexpectedly rose in June, most economists believe it can’t be sustained post-Brexit.
The sterling slips 0.1 percent against the US dollar to $1.3257 after the data were released on Monday.