United Kingdom construction activity slumped to seven-year low in July — Markit

Moreover, sluggish market demand indicated by the declining fixed-asset investment growth rate in the first half of the year, especially in the private sector, and the reduction of excessive production capacity in some traditional industries have combined to contribute to the contraction in the manufacturing industry.

Britain’s central bank has telegraphed plans to cut interest rates to a new low Thursday as part of a package of measures to cushion the economy.

Activity among United Kingdom manufacturers contracted at its fastest pace for three years in July, according to a closely watched survey.

Employment fell for a seventh month in July, with firms linking lower staffing to the drop in output and new orders. “The weakening order book trend and upswing in cost inflation point to further near-term pain for manufacturers”.

“The weak numbers provide powerful arguments for swift policy action to avert the downturn becoming more embedded”.

Markit said levels of production and new orders contracted last month although there was an increase in export business helped by the plunge in the value of sterling.

He said: “There was little consolation from the detail of July’s survey”. Higher levels of output have been recorded in each of the past two months, with the latest expansion the fastest since November 2015, according to the report.

“Without new orders coming through, this downward trajectory is likely to get worse, at least in the short term”.

The level is still 0.3% higher than June 2015, and construction spending in the first half of 2016 is 6.2% better than it was during the first six months of past year.

Tim Moore, a senior economist at Markit added: “The figures confirm a clear loss of momentum since the second quarter of 2016, led by a steep and accelerated decline in commercial building”.

But there are signs consumer confidence is struggling, while Markit said its earlier one-off “flash” PMI surveys were consistent with the economy shrinking by a quarterly 0.4 per cent if they persisted.

However, s ome economists have even suggested that Britain could be heading towards another recession.

Economic data for the second quarter were slightly stronger than expected due to a housing boom and government infrastructure spending that boosted demand for materials from cement to steel.

The British economy has suffered a “dramatic deterioration” in the four weeks since the United Kingdom voted to leave the European Union, new figures on Friday (22 July) showed, prompting the country’s new Chancellor to warn he may have to “reset fiscal policy” in the autumn.