Construction buyers report first activity drop in 11 months
UK construction buyers reported the first decline in activity in 11 months during February, after ten months of growth.
That’s according to the latest IHS Markit/CIPS UK Construction Total Activity Index, which recorded a score of 49.5 for the month, down from 50.6 in January (a score above 50 denotes growth, while a score below 50 indicates a contraction).
The drop was led by reductions in commercial building and civil engineering activity, according to the index. A “soft patch” in new orders so far in 2019 meant that job creation was subdued in February and survey respondents reportedly cited concerns about a lack of new projects to replace completed contracts.
Residential work was the best performing area of the sector, with growth recorded for the 13th month running. However, the rate of expansion was “modest” and could not offset declines in commercial and civil engineering which were the steepest since March 2018.
Tim Moore, economics associate director at IHS Markit, which compiles the survey, said: “The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects. Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space. The fall in commercial work therefore hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.
“There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year. This leaves the construction sector increasingly reliant on large-scale infrastructure projects for growth over the year ahead.
Noting the positives, Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Input price inflation was not as strong compared to the last couple of years and employment creation was modestly maintained in spite of some companies placing a freeze on any new hires. In short, the foundations of the construction sector are crumbling under the weight of Brexit and businesses are switching to survival mode until the way forward is cleared.”