The worrying downward trend in construction activity comes out strongly in the latest set of Bank of England estimates for the economic activity. Construction ranks the lowest by some margin of the range scores provided by the Bank of England’s agents for August.
The Bank of England’s 12 agents make monthly assessments on the nation’s economic conditions from intelligence they gather from hundreds of contract calls each month. From this they derive a score on various elements of the economy including construction.
Their latest assessment of construction output is unsettling. The agents give construction a score of -1.6, its lowest since the spring of 2010.
But then the trend was up. Now it’s down. So the score is probably more akin to those given at the tail end of 2008.
The agents’ score is shown in red and compared with the more optimistic Markit/CIPS construction survey in blue.
The clear implication is that in the sober judgement of these agents, construction is getting worse faster.
The scales are not comparable. The Markit/CIPS uses 50 as the no change line on a scale of 100 and the BoE Agents use a plus and minus scale in single digits, which to date has not exceeded +/- 5. But there are clear similarities as they are presented.
However, while the Markit/CIPS survey suggests on the face of it an industry in stagnation, the Bank of England estimates suggests that things are getting worse.
The Bank of England seems to be much more in line with the construction output figures produced by the ONS. And as I suggested when they were released, the reality that lies behind those rather gloomy ONS construction output figures is very worrying indeed.
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