Construction

  • Construction output declined further during the three months to August, falling by 0.8% compared to the previous three month period. Output over the period was 1.8% higher than a year earlier, weaker than the growth rate of the wider UK economy and the slowest for two years. This slowing is entirely due to lower repair and maintenance work- these tend to be ongoing short-term investments which are likely to have been halted due to election hiatus. Projects started last year mean new build output growth has continued, but the slowing in starts recorded earlier this year by Glenigan will reduce output growth over the next 6 months.
  • The Glenigan Index for October was down 2% year on year, however the figures indicate a bounce back after an election hiatus over spring and summer. September and August both saw strong levels of construction project starts; a weak July held back growth. The private housing and commercial sectors were particularly strong.
  • The Markit/CIPS PMI survey reached its strongest level since February, due to strong rises in commercial and residential activity. The survey suggests that sub-contractors are still getting busier, but shortage of supply and rates of price rises eased slightly. 52% of those surveyed expect growth in the next 12 months, while just 6% expect decline.

Economy

  • Surveys from both the CBI and Markit point to a recent weakening in UK manufacturing. The CBI found zero output growth during the three months to September, for the first time in over two years. The Markit PMI remained above the 50.0 neutral mark, but at the lowest level for three months. Both surveys pointed to a decline in export orders as a cause for the slowdown.
  • Labour productivity showed an encouraging sign during 2015 Q2, with output per hour rising by 0.9% compared to the previous quarter. Compared to both the previous quarter and a year earlier, this rate of improvement was the strongest seen since 2011. UK productivity has been exceptionally weak since the start of the economic downturn, and the ONS estimate it is 15% lower than if pre-downturn trends had continued. Improving productivity is generally seen as essential for long-run growth in wages and living standards.
  • Household spending during 2015 Q2 rose by 0.8% compared to the previous quarter and by 3.1% from the same quarter a year ago, according to the ONS.
  • In the 3-months to August 2015, the UK’s deficit on trade in goods and services was estimated by the ONS at £8.1 billion; widening by £1.3 billion when compared with the 3-months to May 2015. The combined trade deficit of the first two months of quarter 3 (July and August) 2015 is already double the total trade deficit in quarter 2 (April to June) 2015.

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