UK construction companies reported the sharpest fall in output in two-and-a-half years in June while demand for construction products plummeted in the second quarter.
Anecdotal evidence attributed part of the decline in June to the extra bank holiday, but respondents to two surveys highlighted weaker underlying business conditions.
The Chartered Institute of Purchasing & Supply (CIPS) said its purchasing managers’ index for construction showed its sharpest fall since the start of 2010, but also the largest since February 2009. It described it as a marked loss of momentum following solid expansion in the previous survey.
The Construction Products Association trade survey showed that after a relatively good first quarter, product manufacturers are extremely concerned about future demand.
Although one-fifth of light side suppliers said sales increased in Q2, 45% of heavy side firms reported a fall, suggesting difficult times in the second half of the year as light side products are used later during construction projects.
CIPS report author Tim Moore said the temporary factors should not be overplayed. "Construction firms’ assessment of future output dropped to an eight-month low in June, whereas past distruptions such as heavy snowfall and the 2011 royal wedding boosted future expectations as companies anticipated a catch-up effect."
