Investing.com - UK construction sector activity dropped more than expected in July, hitting an 11-month low, industry data showed on Tuesday
In a report, market research firm IHS Markit and the Chartered Institute of Purchasing & Supply (CIPS) said that their UK construction purchasing managers' index fell to a seasonally adjusted 51.9 last month from June’s reading of 54.8.
Economists had expected the index to drop to only 54.5 in July.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
IHS Markit highlighted that the reading was its weakest performance since August 2016 as commercial work fell at the fastest pace for 12 months.
The research firm further indicated that a decline in new orders led to softer job creation in July.
“July data reveals a growth slowdown in the UK construction sector, mainly driven by lower volumes of commercial development and a loss of momentum for house building,” IHS Markit associate director Tim Moore commented in the report.
“Weaker contributions from the cyclically sensitive areas of construction activity more than offset resilience in the civil engineering sector,” he added.
Moore further pointed out that supply chain pressure remained intense while materials prices continued to rise at one of the fastest rates seen for six years.
“The combination of weaker order books and sharply rising construction costs gives concern that an extended soft patch for the construction sector may be on the horizon,” Moore warned.
Following the report, GBP/USD traded at 1.3231 compared to 1.3232 ahead of the release, EUR/GBP was at 0.8963 compared to 0.8947 earlier, while GBP/JPY traded at 146.47 compared to 146.67 previously.
Meanwhile, European stock markets traded mostly lower. London’s FTSE 100 dropped 0.22%, the Euro Stoxx 50 lost 0.28%, France's CAC 40 traded down 0.22%, while Germany's DAX slipped 0.08%.