Construction activity slows down by more than expected in June

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Activity among the UK's builders slowed by more than expected in June according to the latest survey snapshot of the sector.

The Purchasing Managers' Index came in at 54.8 in the month, down from 56 in May and lower than the 55 City of London analysts had pencilled in.

Any reading above 50 signals growth.

All three of the main construction sectors - housebuilding, commercial and civil engineering - slowed in the month.

Measures of business optimism hit their lowest levels of the year so far.

"Survey respondents commented on renewed caution among clients, in response to heightened political and economic uncertainty," said Tim Moore, senior economist at IHS Markit, which compiles the PMI.

June's construction reading follows a bigger than expected June slowdown in manufacturing reported by the PMI Monday.

Construction accounts for around 6 per cent of UK GDP and manufacturing 10 per cent.

The services sector PMI, which covers the rest of the economy, will be released on Wednesday.

The building sector grew by 1.1 per cent in the first quarter of 2017, while the wider economy slowed to just 0.2 per cent GDP growth, according to the Office for National Statistics.

"The average level of the PMI in Q2 is consistent on past form with quarter-on-quarter growth in construction output of about 0.5 per cent in Q2," said Samuel Tombs, economist at Pantheon.

"The official measure of output in April, however, was 1.5 per cent below its Q1 average, so unless the data are revised significantly the construction sector likely dragged on GDP growth in Q2."

Official statistics show the construction sector expanded by 2.4 per cent in 2016 as a whole, following a 4.5 per cent expansion in 2015 and 8 per cent in 2014.

However, the level of construction output level still remains below its peak in 2007.