UK Construction Posts First Decline in 11 Months

Orbex Market Flash

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There are just over 20 days ahead of the UK’s official departure date from the EU. And the latest domestic economic data has given further evidence of the negative impact of Brexit uncertainty.

The HIS Markit/CIPS UK Construction PMI covering February showed that construction spending fell over the month. This marked the reading’s first decline in eleven months.

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The decrease is mainly due to a reduction in commercial building and civil engineering activity, as client demand has waned on the approach to Brexit.

The survey showed that supplier delivery times had also risen by their largest amount since August 2018. Some businesses have blamed stockpiling undertaken by UK manufacturers on creating shortages in transport availability and longer wait times.

Brexit Anxiety Intensified

Tim Moore who is an economic associate at IHS Markit, explained:

“The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects.”

Moore went on to say:

“Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space. The fall in commercial work, therefore, hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.”

Brexit Vote on Watch

The upcoming Brexit vote, scheduled to be held by March 12th, will now be keenly watched by consumers and businesses alike.

A failure to pass the deal will mean that MPs will have the chance to vote on whether to continue with a no deal Brexit or ask for an extension to the March 29th deadline.

Technical Perspective

UK100

After trading up to breakout above the 7195.6 level resistance, the FTSE has since retraced lower after finding resistance at a test of the broken 7265.3 lows. While price remains above the 7001.9 level support, focus remains on a further run higher. Long term bearish trend line resistance is the next technical level to watch.

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