UK Construction at Weakest Point for Seven Years

Last month the UK’s construction industry was at its weakest point in seven years, with the housebuilding sector suffering the most.

According to a survey carried out by The Markit/CIPS, managers’ purchases fell to 46 last month. The 50 mark separates contraction with expansion activity, which is down significantly from April’s figure of 51.2.

Markit Senior Economist, Tim Moore, believes that trading conditions were always going to be tough in the build up to the UK’s vote on its membership of the European Union due to the uncertainty surrounding the outcome.

However, Markit say that the vast majority (80%) of the survey was carried out prior to the vote and believes that the speed and extent of the downturn in the face of economic and political uncertainty is a big warning for the wider outlook after the Brexit vote.

IHS Global Insight’s Chief UK Economist, Howard Archer, commented that the survey results paint a dire picture and added that it now seems inevitable that the construction industry will now face a contraction.

The sector hardest hit was housebuilding, which saw the fastest fall of activity in four years.

In the wake of the referendum, this pain has got even worse for housebuilders as share prices of major housebuilding firms such as Persimmon, Barratt and Taylor Wimpey have all fallen since the UK’s vote to leave the European Union as the market continues to respond to fears about a slowing economy which has hit transaction volumes.

Elsewhere in the report, Markit reported that commercial building work had slightly lost momentum, while civil engineering activity remained stable.

Most of the major civil engineering projects currently taking place are based on contracts that were signed several years ago.

Chief Executive of built environment company Scape Group, Mark Robinson, believes it is crucial for the government to continue pushing through major infrastructure projects such as HS2.


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BDC 309 : Oct 2023