Construction orders fall for first time in three years

Uncertainty surrounding referendum stalling projects including civils work.

Delays over uncertainty posed by the EU referendum has led to the first drop in new construction orders in three years.

The purchasing managers’ index (PMI) for the construction sector showed business activity dropping to its lowest level since June 2013, while the majority of firms surveyed reported a fall in new orders – the first time this has happened since April 2013.

The headline activity reading fell to 51.2 in May, after dropping to 52 the previous month from 54.2 in March. The disappointing reading was only just above the 50 level that separates expansion from contraction.

Companies are putting off new projects until after the outcome of the referendum on June 23, the survey showed, causing a knock-on effect for the construction sector, which makes up around 6 per cent of the economy.

According to a special question added to the survey in May, around one third of respondents said they had seen a detrimental impact on their business from uncertainty caused by the upcoming referendum.

Residential building work increased at one of its weakest rates since early 2013, while growth of commercial activity was the slowest for nearly three years.

Civil also engineering stagnated in May, which made it the worst performing sub-category for the second month running.

However, staff hiring continued to grow, which marked three years of continuous job creation.