Construction recruitment ‘slows to a crawl’

4 February 2019 | By Neil Gerrard

Image: Dreamstime/Jose Alberto Barci Figari

Construction recruitment has ‘slowed to a crawl’ as the industry lost momentum in January, with buyers recording the lowest level of business activity in ten months.

That’s according to the latest figures from the IHS Markit/CIPS UK Construction Total Activity Index, which dropped to 50.6 in January, down from 52.6 in December.

The index has posted above the 50.0 no-change mark each month since the ‘Beast from the East’ hit sites in March 2018 but the latest month’s data is the weakest since then.

Tim Moore, economics associate director at IHS Markit said: “Staff recruitment slowed to a crawl in January, with construction firms reporting the softest rate of job creation since July 2016. Delays to client decision-making on new projects in response to Brexit uncertainty was cited as a key source of anxiety at the start of 2019.”

All three categories of construction output recorded weaker trends than those in December.

Residential work was the strongest although the latest expansion was “modest” according to the index. Civil engineering activity increased marginally and was “much softer” than December’s 19-month high.

Commercial work was the weakest-performing area in January, with the index pointing to a decline in commercial projects for the first time in 10 months.

New business growth also fell to an eight-month low in January, according to the figures.

But construction firms are still positive about the outlook for business activity in 2019, with 41% of the survey panel anticipating a rise in output and only 16% expecting a fall.

Moore added: “UK construction growth shifted down a gear at the start of 2019, with weaker conditions signalled across all three main categories of activity. Commercial work declined for the first time in ten months as concerns about the domestic economic outlook continued to hold back activity.

“The latest survey also revealed a loss of momentum for house building and civil engineering, although these areas of the construction sector at least remained on a modest growth path.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply said: “The sector suffered a sharp drop in output growth in January, and the softest rise in purchasing volumes since September 2017, as Brexit continues to hamper progress and dampen client confidence.

“Residential building, the stalwart of the sector leading the way in the last six months, lost its momentum with the weakest performance since March 2018. However, commercial building suffered the most of the three subsectors declining for the first time in just under a year. Larger orders were held back by clients and overall activity slowed.

“The biggest shock came in the form of job creation which has managed to suffer the slings and arrows of Brexit highs and lows with solid hiring since the referendum result. Employment rose at the slowest rate since July 2016 and with optimism also in short supply, the sector only needs a small nudge to tip it closer to recession."

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