Employment in the construction sector fell for the first time in three years in July as firms scaled back capacity, and subcontractor use dipped to its lowest rate in “nearly three years”.
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Among new orders, consumer goods saw the strongest pace of expansion, while export orders rose the fastest since January, driven largely by a depreciation in the rupee.
An index reading of above 50 indicates an overall increase in the economic activity, and below 50, an overall decrease.
Activity in China’s manufacturing sector unexpectedly shrank in July, an official survey showed on Monday, with small and medium-sized firms leading the fall and reinforcing fears that the economy may once again be losing momentum.
Commercial work, which accounts for nearly a third of total new construction work, contracted at the fastest rate since December 2009.
The string of reports pointing to a lacklustre performance from the United Kingdom economy has sharpened the focus on this Thursday’s interest rate announcement, with many economists expecting the Bank of England to cut the cost of borrowing and increase quantitative easing in a bid to shore up economic growth.
Separately, the China Federation of Logistics and Purchasing, an industry group, said its PMI edged down to 49.9 in July from 50 in June. Other PMI’s released by Markit have also shown huge recent downturns in sentiment, including in the manufacturing and construction industries, and have shown negative figures for the United Kingdom as a whole.
Elsewhere, the United Kingdom manufacturing sector’s contraction picked up speed in July.
According to PMI (Purchasing Managers’ Index) survey data from IHS Markit and CIPS, output and new business both declined and at the fastest rates since early 2009, with the Business Activity Index falling from 47.4 in July, compared with 52.3 in June.
There was a further increase in raw material prices at only a slightly slower pace than the increase seen for June and factory-gate prices also increased for the month.
Markit chief economist Chris Williamson said the figures suggested the Brexit vote had had little impact so far but growth remained modest at best. The U.K. benchmark rate has sat at a record low 0.5% since March 2009.
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Moore did, however, note: “It’s not all bad news, at least insofar as the decline in construction output was little-changed from June’s seven-year low. However, the unprecedented month-on-month drop in the all-sector index has undoubtedly increased the chances of the United Kingdom sliding into at least a mild recession”.
