EU referendum fears trigger first decline in UK construction orders since 2013 - Markit

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LONDON, June 2 (Reuters) - British construction orders fell last month for the first time in more than three years, as concern about a June 23 referendum on whether Britain should remain a member of the European Union prompted companies to put off new projects, industry figures showed on Thursday.

Financial data company Markit (NasdaqGS: MRKT - news) said its monthly survey of construction purchasing managers showed the weakest overall growth in activity growth since June 2013, with its headline construction PMI dropping to 51.2 from April's 52.0.

Economists in a Reuters poll had expected the index to hold steady at 52.0 in May.

The new orders component fell especially sharply, dropping to 48.1 from 50.1, its first time since April 2013 below the 50-mark that separates growth from contraction and the lowest index reading since March 2013.

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

Last month, the Bank of England said commercial property transactions had ground to a halt in the run-up to June's EU vote. Official figures for the first quarter of 2016 showed the first year-on-year drop in business investment in three years, led by weaker spending on offices and non-residential buildings.

Markit said civil engineering projects showed the least activity, followed by housebuilding and commercial work.

However, companies stepped up hiring, increasing staff numbers at the fastest rate since January, and Moore said there was the biggest divergence between orders and staffing trends since the survey began in 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 percent of Britain's economy, though it accounts for a disproportionate amount of volatility in official gross domestic product data.

Tuesday's manufacturing PMI showed an unexpected return to modest growth. Friday's private-sector services PMI will give stronger direction on second-quarter growth. (Reporting by David Milliken, editing by Larry King)