Construction output bombs as builders bear the brunt of Brexit

The downturn was registered by the Markit/CIPS UK Construction Purchasing Managers’ Index (PMI), which found the drop-off had been led by a steep decline in residential building and a reduction in commercial work for the first time since May 2013.

Tim Moore, senior economist at Markit, said: “Widespread delays to investment decisions and housing market jitters saw the UK construction sector experience its worst month for seven years in June. Construction firms are at the sharp end of domestic economic uncertainty and jolts to investor sentiment, so trading conditions were always going to be challenging in the run-up to the EU referendum.”

In the midst of the uncertainty, the market was calling for the Bank of England to keep a firm but responsive hand on the tiller. David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply, said: “Though the majority of responses, around 80% were received before the Brexit result, the continuing ambiguity and indecision has flung the sector into unknown territory. Firms will likely look towards any remedies the Bank of England and the UK Government can offer if the situation worsens post-Brexit.”

The nervousness around the strength of the construction sector in the coming months was reflected by the immediate drop in share prices experienced by many of the biggest construction firms in the UK, as soon as the result of the EU referendum was known.