'Beast from the East' tears through UK construction in March

By Andy Bruce

LONDON (Reuters) - Britain's construction industry seized up due to heavy snow last month, prompting the biggest drop in activity since just after 2016's Brexit vote, an industry survey showed on Wednesday.

The IHS Markit/CIPS UK Construction Purchasing Managers' Index (PMI) slumped to 47.0 from 51.4 in February.

It was a bigger fall than had been predicted by any economist in a Reuters poll, which on average pointed to only a modest drop to 50.8. The 50-point line divides expansions in activity from contractions.

Last month an unusual Siberian weather system that British meteorologists dubbed "the Beast from the East" brought snow, strong winds and the coldest temperatures in several years to much of Britain and elsewhere in Europe.

House building was little affected, but the storm clobbered other sectors, the survey showed.

Civil engineering firms suffered their biggest downturn in five years. The survey's index for commercial work, which had recovered in January and February, staged its biggest one-month drop since 2009.

But Bank of England officials, who are widely expected to raise interest rates in May, are unlikely to be perturbed by a single month of weak construction figures.

A separate PMI published on Tuesday showed manufacturers shrugged off the bad weather.

There were also signs that a rebound in construction should follow in April. Optimism among construction companies hit a nine-month high in March and they hired workers at a faster pace.

On the other hand, order books contracted for a third month running, with the bad weather responsible only in part for the latest drop. Construction firms highlighted ongoing weak demand, a year before Britain is due to leave the European Union.

"Survey respondents noted that underlying demand remains constrained by heightened economic uncertainty and risk aversion among clients," Tim Moore, associate director at survey compiler IHS Markit, said.

Construction makes up only about 6 percent of British economic output but is watched closely as a guide to investment and sentiment in the wider economy.

The PMI covering the much larger services sector is due out on Thursday.

- Detailed PMI data are only available under licence from IHS Markit and customers need to apply for a licence.

(Reporting by Andy Bruce; Editing by Hugh Lawson)