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Decline in construction output slowest since July, buyers report

3 December 2019 | By Neil Gerrard

Buyers have witnessed the slowest decline in construction output during November since July.

That’s according to the latest IHS Markit/CIPS UK Construction Total Activity Index, which rose to 45.3 last month, up from 44.2 in October (where a score below 50 indicates a decline in output).

The survey pointed to the slowest drop in overall output for four months, with reduced business activity attributed to a lack of new work to replace completed contracts. In some cases, survey respondents suggested that unusually wet weather in November had also weighed on output.

All three areas of construction recorded a fall in output in November, with civil engineering the worst performing, followed by commercial building. There was a much slower decline in housing activity.

But the latest data also pointed to a sharp reduction in new work across the construction sector, with lower sales volumes recorded for eight consecutive months, which is the longest phase of decline since 2012-13.

Tim Moore, economics associate director at IHS Markit, which compiles the survey, said: “UK construction output fell again in November as Brexit uncertainty and the forthcoming general election continued to send a chill breeze across the sector. The speed of the downturn in construction work eased a little since October, but the survey continues to signal a notable drop-off in business conditions compared with the first half of 2019.

"Greater hesitancy among clients led to a decline in overall new work for the eighth consecutive month during November. Construction companies reported a particularly sharp fall in demand for commercial projects amid a greater squeeze from domestic political uncertainty and delayed investment decisions.

"House building has been the most resilient category of construction output in 2019. However, it remains a concern that overall volumes of residential building work have dropped in each month since June, which is the longest phase of decline since the start of 2013.

"Greater spending on transportation and energy projects had been expected to help boost infrastructure work this year and next, but survey respondents indicated a sustained soft patch for overall civil engineering activity in November. Some construction companies reaffirmed their concern about the delivery of road and rail projects, with delays to contract awards acting as an additional headwind to growth projections for 2020."

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS) added: "Construction firms have not seen dwindling new orders for this length of time since 2013, as clients continued to defer spending large and small, citing political indecision as the cause of their non-committal.”

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