Responding to new data on the construction sector, Sarah McMonagle, Director of Communications at the Federation of Master Builders (FMB) suggested that the combination of Brexit uncertainty and skills shortages has created a perfect storm in the industry.
Adjusted for seasonal influences, the latest IHS Markit/CIPS UK Construction Total Activity Index reveals the first back-to-back fall in output levels since August 2016, confirming a sustained decline in total construction activity.
The headline Index for March stood at 49.7 which, although up from 49.5 in February, was still below the 50.0 no-change threshold.
Despite a rise in the performance of the residential building sector, both commercial work and civil engineering activity fell in March.
Available at http://bit.ly/2TZW2aM, the IHS Markit/CIPS Purchasing Managers’ Index (PMI) for March shows that commercial construction was the worst performing area during the period, with business activity dropping to the greatest extent since March 2018.
There were, it states, widespread reports that Brexit uncertainty and concerns about the domestic economic outlook had led to risk aversion among clients.
“The construction industry is being seriously affected by Brexit uncertainty as evidenced by two very worrying sets of results for construction output in the first quarter of 2019”, Ms McMonagle noted.
It is not surprising, she added, that employers are finding it hard to plan for the future, when they do not know when, or indeed if, the UK will leave the EU, and the results are a reminder of just how vulnerable the construction industry is to political turmoil, as confidence among consumers and contractors continues to wobble.
For the Chartered Institute of Procurement and Supply (CIPS), Duncan Brock observed that the small rise in job creation, optimism and new orders were not enough to buck the underlying downward trend in a sector suffering from client hesitation and consumer gloom.
There was also intense competition from other sectors, he explained, with Brexit-related stockpiling of supplies increasing delivery times and creating raw material shortages.
Last reviewed 16 April 2019