Construction industry continues to lose momentum amid Brexit fears
The UK construction industry is continuing to lose momentum in the economy amid Brexit fears.
Growth in the sector has slowed a 10-month low in growth in January of 2019.
A drop in the IHS Markit/CIPS UK Construction Purchasing Manager’s Index went to 52.8 in December, from 53.4 in November. This has since dropped even further to 50.6 in January 2019. Above 50.0 suggests that there is still growth – but anything below 50.0 means that the industry is declining. However, this has slowed to its lowest level since the Beast From The East hit the UK in March 2018.
The slowdown in growth is seemingly largely caused by delays to the start of new building projects country-wide. This, in turn, is caused by fears of a no-deal Brexit.
What the experts had to say:
Steve Radley, Policy Director at the Construction Industry Training Board (CITB), said, “[The survey] confirms what we are hearing from the industry – that client spending is on hold and, consequently, forward planning by contractors around recruitment, skills and training is too.
“This uncertainty is compounding existing concerns around the current availability of skills, future access to EU workers and the need to upskill the domestic workforce.”
Blane Perrotton, Managing Director of Naismiths Property Consultants, said, “Brexit fears have squeezed developer demand ever since the EU referendum, but as the prospect of a no-deal exit looms even larger, Britain’s builders are grappling with the realisation that things could be even worse than feared.”
Mark Jones, speaking on behalf of Lloyds Bank’s infrastructure and construction team, said, “While the suggestion is that regional cities like Birmingham, Manchester and Edinburgh are more bouyant, it’s not clear that there is enough activity [in projects outside London] to pick up the slack from the capital.”
Duncan Brock, Director of the Chartered Institute of Procurement and Supply (CIPS) said, “The biggest shock came in the form of job creation. [Job creation] has managed to suffer the slings and arrows of Brexit highs and lows with solid hiring since the referendum result.
“Employment rose at the slowest rate since July 2016. With optimism also in short supply, the sector only needs a small nudge to tip it closer to recession.”
IHS Markit Economics Director Tim Moore said, “”UK construction growth shifted down a gear at the start of 2019, with weaker conditions signalled across all three main categories of activity.
“Commercial work declined for the first time in ten months. Concerns about the domestic economic outlook continued to hold back activity.
“Delays to client decision-making on new projects in response to Brexit uncertainty was cited as a key source of anxiety at the start of 2019.”