British construction firms recorded their biggest drop in activity in more than two years last month, as builders cut work and engineering firms faced a lack of new contracts.
Britain’s July manufacturing PMI also showed some easing of inflationary pressures, but this is likely too late to sway the Bank of England, which is expected to raise interest rates by half a percentage point.
The PMI sank to 48.9 in July from 52.6 in June, the lowest level since May 2020, and just the second time it was below the 50 point that separates growth from contraction.
Economists had expected the index to remain at 52 points. The latest data showed that construction output had risen 4.7% year-on-year in May.
“Cost of living pressures, higher interest rates and increased recession risks for the UK economy are weighing on construction activity,” said S&P Global Market Intelligence economist Tim Moore.
British inflation hit a 40-year high of 9.4% in June and some economists estimate it could hit 15% early next year as energy prices continue to rise.
Source: Capital
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