United Kingdom construction stuck in 'devastating' downturn as Brexit deters building projects

Japan PMIs better for services than manufacturing

A manufacturing PMI on Tuesday showed factory activity contracted at its steepest rate in nearly seven years last month and a services PMI published on Thursday dropped to 51.6 from August's 53.5 - the lowest since the start of the year.

The Markit Stanbic Bank Kenya Purchasing Managers' Index (PMI) for manufacturing and services rose to 54.1 in September from 52.9 in the previous month. A reading below 50 indicates contraction.

Firms saw an extension of the decline in new orders during September, recording a 15th successive monthly fall in total demand.

A historically steep drop in new orders was also registered, while firms trimmed employment at the fastest rate since the end of 2010 due to unfavourable demand, client hesitancy and low confidence. "After a relentless six-month decline in order books driven by Brexit uncertainty and political indecision, this is hardly surprising".

Commenting on the latest survey results, Pollyanna de Lima, Principal Economist at IHS Markit, said: "We've seen the gradual slowdown in manufacturing sector conditions continue in the second quarter of fiscal year 2019-20, with the PMI average for the quarter at its joint-lowest since the same period in 2017".

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The strong dip in sales coincided with a further tapering of purchasing activity by United Kingdom construction companies in September. This in turn had significant knock-on effects on construction employment with the biggest fall in staffing levels since December 2010.

Construction firms also said they were "mildly optimistic" that business will improve over the next 12 months, but would be dependent on the Brexit outcome and economic trends improving worldwide.

Joe Hayes, Economist at IHS Markit, said: "Activity is being pulled down at its second-fastest clip for over a decade as firms are buffeted by client hesitancy, heightened Brexit uncertainty and a weak outlook for the United Kingdom economy". The details of the report were also poor, with dismal numbers on new business and employment.

The violence added to overall uncertainty and unease over economic growth, which is set to expand by less than 1% in 2019, raising the risk of further credit rating downgrades and more hard conditions for businesses and consumers.

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