Industry

03 OCT 2018

UK CONSTRUCTION GROWS AT SLOWEST PACE IN SIX MONTHS

Construction output in the UK saw its weakest rise for six months as concerns over a “no deal” Brexit begin to mount, according to the latest report from Markit Economics.

The Purchasing Managers' Index (PMI) scores came in at 52.1 in September, down from a 3-month low of 52.9 seen in August while missing an estimated 52.5 return. The PMI survey of firms showed that optimism for the year ahead declined in September with firms citing political and investor concerns about Brexit as a factor in lower confidence.

A lack of new work to replace completed projects was also blamed after a summer which saw an upturn in projects taken on following bad weather stagnating work at the start of the year. 

Positive signs from the data showed the strongest new orders since December 2016 and the fastest employment growth since December 2015, boosted by trainees and apprentices.

Tim Moore, associate director at IHS Markit and author of the IHS Markit/CIPS Construction PMI, said a lack of new work to replace completed projects meant that civil engineering saw an overall decline in activity for the second month running.

 “UK construction firms experienced softer output growth during September, with house building, commercial and civil engineering all losing momentum,” he added. “There were mixed signals in terms of the near-term outlook. New order books strengthened to the greatest extent since December 2016, which indicates that construction workloads remain on an upward trajectory. “However, latest data showed that overall confidence about the year-ahead business outlook was among the lowest seen since the start of 2013.”

Civil engineering was the worst performing subcategory of construction work, with activity declining at a slightly quicker rate in September. 

Mark Robinson, chief executive of Scape Group, has called on ministers to stop thinking short-term but to have a long-term plan for infrastructure moving forward. 

“Crucially, we need to see cross-party consensus on infrastructure decision making to end this ‘stop and start’ process,” Robinson said. “Too often ministers make decisions based on short-term political gain rather than the long-term value of projects, despite the fact that all parties agree that increased infrastructure investment is needed to bolster the UK economy. The key to growth is pushing ahead with significant investment which fosters long-term growth and connectivity, so I disagree with renewed calls from some politicians for work on HS2 to be paused.”

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