The UK construction sector contracted for the first time in more than a year in September as a sustained fall in new work led to the reduction in overall business activity, data from IHS Markit showed Tuesday.
The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index fell to 48.1 in September, while the reading was expected to remain unchanged at 51.1.
The score was below the 50 no-change threshold for the first time in 13 months. The latest reading signaled the fastest decline in overall construction output since July 2016.
Lower volumes of construction work reflected marked falls in both commercial and civil engineering activity. The reduction in civil engineering work was the steepest for almost four-and-a-half years.
The latest decline in work on commercial development projects was the second-sharpest since February 2013. Meanwhile, house building was the only broad area of construction activity to register an expansion.
New business volumes slid for the third consecutive month, thereby suggesting a continued shortage of work to replace completed construction projects.
More subdued demand led to another fall in sub-contractor usage and a relatively weak rate of job creation among construction firms in September.
Input buying dropped for the first time in six months in response to reduced workloads. Companies continued to face headwinds from rising input costs, with higher prices for imported materials helping to drive up inflationary pressures to a 7-month high.
Further, the survey indicated that business optimism eased to its second-lowest since April 2013. A number of firms cited concerns about UK business investment prospects, linked to uncertainty around the path to Brexit.
"A dismal picture of construction emerged this month as the sector showed signs of worsening business conditions across the board," Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply, said.
"With the biggest contraction in overall activity since July 2016, and a drop in new orders, optimism was in short supply," Brock added.
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