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Seven-year low for UK construction

Construction Cranes 2000

Construction activity in the UK has fallen to its lowest level in seven years, with new work falling at its fastest rate since 2012.

According to the Markit/CIPS Construction PMI for June, activity was its lowest monthly rate since June 2009, while the PMI index level fell to 46.0, down from 51.2 in May.

This was the first time the index had fallen below the 50.0 ‘no change’ level since April 2013, marking the first decline in construction activity as recorded by the PMI for more than three years.

Both the housing and commercial sectors saw significant declines in activity, which was attributed to uncertainty before the EU referendum in June – 80% of survey responses were received before the result on 24 June.

This heightened uncertainty was also reflected in new orders, with invitations to tender seeing their sharpest decline since December 2012.

Only civil engineering, which was flat in June, avoided a pre-referendum decline.

Overall, levels of business confidence fell in June compared with May, with confidence for the year ahead hitting its lowest level for exactly three years.

CIPS chief executive David Noble said the referendum result had “flung the sector into unknown territory”.

“The only glimmer of light through the brickwork is that the rate of decline was not as sharp as that experienced during the last recession,” he said.

“But, with business confidence at a three-year low and purchasing activity at its lowest level for six-and-a-half years, this is likely to offer little comfort.”

Meanwhile, the UK is almost certain to miss its EU 2020 targets for renewable energy, the National Grid has said. The company produced UK future energy scenarios covering four different policy approaches and, even in the most environmentally minded scenario, the UK is projected to fail in its target of producing 15% of total energy from renewables.

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