Construction Orders: First Fall Since 2013

British construction orders fell last month for the first time in three years, with economists blaming the coming EU referendum.

Financial data company Markit (NasdaqGS: MRKT - news) 's construction purchasing managers' index showed a reading of 51.2 last month, on from April's 52.

A reading above 50 indicates growth.

New (KOSDAQ: 160550.KQ - news) orders fell from 50.1 in April to 48.1 - the first time since April 2013 that it was below the 50-mark.

Markit economist Tim Moore said: "Survey respondents noted that the forthcoming EU referendum has disrupted new order flows and the timing of client decision-making in particular."

Civil engineering projects had the most challenging month, followed by house building and commercial work but, despite this, companies increased staff numbers at the fastest rate since January.

Mr Moore said this was the biggest divergence between orders and staff growth since 1997.

"An optimistic interpretation is that construction firms are looking through the second-quarter weakness and feel that workloads will recover momentum," he said.

"However, should this fail to materialise later in 2016, then job creation is likely to come under pressure given its elevated trend relative to current demand patterns," he added.

Construction makes up 6% of the British economy.

Samuel Tombs, chief UK economist at Pantehon Macroeconomics, said the construction sector was "in the doldrums" and struggling to recover "under the strain of Brexit risk".

He said: "Even (Taiwan OTC: 6436.TWO - news) after a 'Bremain' vote, we doubt that the recovery in the construction sector will race away. The sector's slowdown has reflected more than just Brexit risk.

"The official data clearly show that public sector construction is being squeezed, while the revival in house building has run into skilled labour shortages (Other OTC: UBGXF - news) ."