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UK construction output drops at fastest rate since 2009

Staff Writer |
UK construction output continued to fall in July as activity dropped by the fastest rate in seven years.

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The Markit/CIPS construction industry Purchasing Mangers Index (PMI) slid to 45.9 in July from 46.0 the month before, which was not as bad as the consensus 44.0 feared by economists but still was the second successive sharp fall and the biggest decline since June 2009.

A steep fall in commercial building alongside a drop in civil engineering activity for the first time in 2016 were the reasons for the accelerated decrease, while residential construction also fell in July but at a lesser rate after June's three-and-a-half year low.

Construction companies blamed continued weakness in order books for the slowdown, with Markit finding an overall reduction in new work for the third month running, although the rate of decline eased since June and was close to that seen in early-2013.

"UK construction activity fell sharply for a second successive month in July, pointing to an ongoing impact of Brexit-related worries on the economy that raises the risk of a recession," said Markit's chief economist Chris Williamson.

Williams said the all sector PMI looks likely to have sunk to 47.3 from 51.9 in June, which would be the steepest fall in business activity since April 2009, while the 4.6 point drop would be the largest ever deterioration recorded since the surveys began in 1997.

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