U.K. Construction Growth Unexpectedly Slows to Weakest in a Year

(Bloomberg) -- U.K. construction growth unexpectedly slowed to the weakest in a year in August, as the industry was hit by reduced business investment and heightened economic uncertainty, according to IHS Markit.

The Purchasing Managers’ Index fell to 51.1, the lowest since August 2016, and down from 51.9 in July. That’s below the 52 forecast by economists in a Bloomberg survey, although it remains above the 50 level dividing expansion from contraction.

New business volumes fell for the second straight month, according to Markit, with survey respondents highlighting a lack of fresh orders to replace completed projects. Companies also exercised greater caution in their approach to hiring, with staff numbers growing at the slowest pace since July 2016.

Reduced levels of commercial work were also a major reason for the continued slowdown, offsetting more robust growth in residential building. Meanwhile, cost pressures were the weakest in almost a year, as the impact of the falling pound on material prices was counteracted by successful negotiations with suppliers amid weaker market conditions.

The report is latest to highlight the struggles the U.K. economy is facing is the wake of last year’s European Union referendum, as growth slows and inflation continues to squeeze the pockets of consumers.

While a report last week showed manufacturing growth was the strongest in four months in August, an index of services, which make up almost 80 percent of the economy, will drop to 53.5 when it is published on Tuesday, according to economists in a Bloomberg survey.