What's going on?

Manufacturing in Britain is booming, but the darker side of Brexit is being felt by the construction industry� construction activity in Britain in August grew at its slowest pace in a year (according to data released on Monday).

What does this mean?

The biggest problem for the construction industry in the UK is that there is not enough new commercial building work to maintain previous growth levels. Given this is occurring in the commercial segment of construction (as opposed to residential), it suggests that businesses are pulling back on investing in themselves, likely due to political instability following the recent election and, in particular, the ongoing Brexit negotiations. This gels with other data that has shown investment by businesses has stopped growing since last year�s Brexit vote.

Why should I care?

For markets: Less spending by businesses is bad for long-term economic growth.

At the heart of economic growth is improving productivity: as companies spend money investing in themselves, they typically improve the way they do business. This allows the same number of workers to produce more things, which leads to greater activity within the economy overall. As spending by businesses stagnates, Britain is digging itself an economic hole.


For you personally: Brits are spending money on their homes in the midst of increased economic uncertainty.

According to Monday�s data, residential building is the one part of the construction industry where growth is accelerating. This suggests that Brits are continuing to spend money renovating their homes (and buying new ones), despite higher inflation pushing up prices (leaving Brits with lighter wallets) and generally darkening economic clouds. The risks of spending money on one�s housing could be rising with the increasing precariousness of the overall economy (for example, getting a big bonus to help pay for that mortgage is looking less likely).