Growth in Britain's construction industry slowed unexpectedly in July, hurt by a loss of momentum in housebuilding and civil engineering, according to a survey that highlighted the economy's reliance on its services sector.
The monthly Markit/CIPS UK construction purchasing managers' index (PMI) fell to 57.1 after hitting a four-month high of 58.1 in June, confounding a Reuters poll estimate for a rise to 58.4.
The slowdown may have reflected an easing of the surge in confidence among construction firms that followed May's unexpectedly conclusive national election, survey compiler Markit said.
Chris Temple, engineering and construction leader at PwC, said: "On the whole, these figures don’t sway us from our view that the construction sector will experience healthy growth this year. However, the ongoing skills shortage is an area of concern.
"The sector has serious skills gaps, and while the government’s plan to create three million more apprentices by 2020 will help in the long term, the situation will get worse before it gets better, as older skilled workers retire. The shortage is also driving up subcontractor bills and this, combined with continuing rises in the prices of construction supplies, means firms may continue to feel pressure on margins.
"This is of course a serious challenge for the construction industry but it has wider implications for the rebalancing of the economy. In particular, it will continue to put the brakes on the build of new affordable housing which is in such critical demand. In addition, it may result in lower overall construction growth than could be achieved if labour was in plentiful supply."
The construction survey showed housebuilding activity increased at the slowest pace since April, marking one of the weakest expansions since mid-2013 and underlining the challenge that policymakers face in tackling Britain's chronic housing shortage.
The government last month announced a plan to remove obstacles to building new houses after it helped cause a surge in house prices by backing subsidies for people trying to get on the property ladder.
Construction firms took on fewer staff in July, although Markit said this was still higher than the historical average.
