UK Building Industry Stagnates in January 2018

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The building industry in the U.K. is facing stagnation in January 2018, on the back of a slump in house building.

The Purchasing Managers’ Index (PMI) for construction was recorded to be 50.2 in January 2018, which is below the 52.2 from the previous month and barely above the 50 mark, separating growth from contraction.

London analysts noted a reading of 52 and the news helped to send the pound down to US$ 1.4214, 0.36 percent lower on the day, as traders adjusted their forecasts of an earlier rate rise from the Bank of England.

“The construction PMI delivered meagre results for January as any hopes for a stellar start to the year were eclipsed by a surprisingly poor show from the housing sector, offering its worst performance since July 2016,” said Duncan Brock of the Chartered Institute of Procurement & Supply.

“With construction teetering on the edge of contraction, this surprise outcome will serve as a jolt to policymakers, that the impact of political and economic uncertainty remains large at the beginning of 2018.”

From a previous of a 16-month of expansion in the readings of residential construction, it turned negative. Some analysts revealed that implosion last month of the giant construction and outsourcing firm Carillion had also negatively affected activity.

“The impact of Carillion’s liquidation has rippled down the supply chain and shaken confidence across the industry. There have inevitably been fears for the sub-contractors with exposure to the collapse,” said Max Jones of Lloyds Bank.

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