Post-Brexit impact

The construction sector has managed to hold strong following the announcement of the Brexit vote, with new orders reaching £6.2bn on the month of June, the highest figure of any month so far in 2016.

According to the June edition of the Economic & Construction Market Review from industry analysts Barbour ABI, residential & infrastructure both had year on year rises in June, with contract values increasing by 26% and 14% respectively.

In addition to these figures, the latest quarterly CBI Industrial Trends Survey has revealed that manufacturing output and domestic orders saw firm growth over the past quarter, but both are expected to slow over the next three months.

Following a slowdown in activity towards the end of 2015, which spilled over into the first half of this year, the survey of 506 manufacturers shows that the sector had a decent recovery over the three months to July.

Output rose at its fastest in two years, while domestic orders and employment also improved. Export orders were flat, but improved on the fall seen in the previous quarterly survey.

But despite this improvement in activity, optimism about the business situation over the past quarter fell at the fastest pace since January 2009, in the aftermath of the referendum result.

Meanwhile, the outlook for the next three months is set to soften, with expectations for total new orders growth at their lowest since January 2012, output growth set to ease and headcount expected to fall slightly.

Commenting on the figures, Rain Newton-Smith, chief economist for CBI, said: “It’s clear that a cloud of uncertainty is hovering over industry, post-Brexit. We see this in weak expectations for new orders, a sharp fall in optimism and a scaling back of investment plans.

“So, it’s important now for the new Government to steady the ship with a plan, and a clear timetable, for negotiating the UK’s relationship with the EU. This, along with a renewed focus on industrial strategy, will help give firms the confidence they need to grow and create jobs.”

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