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| UK construction reports biggest fall in new work since 2009 | UK construction reports biggest fall in new work since 2009 |
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| Britain’s building industry suffered by the biggest fall in new work in more than a decade as Brexit uncertainty gripped construction firms before the deadline on 31 October. | Britain’s building industry suffered by the biggest fall in new work in more than a decade as Brexit uncertainty gripped construction firms before the deadline on 31 October. |
| New orders contracted for a fifth month in May with commercial construction, which includes offices and shops, leading the decline as competition for work intensified and property developers delayed decision-making. | New orders contracted for a fifth month in May with commercial construction, which includes offices and shops, leading the decline as competition for work intensified and property developers delayed decision-making. |
| The measure of new orders on the IHS Markit/CIPS UK construction PMI survey slumped from 44.6 in July to 40, the lowest since March 2009 when the UK economy was in recession following the financial crash. Anything below 50 signals contraction. | The measure of new orders on the IHS Markit/CIPS UK construction PMI survey slumped from 44.6 in July to 40, the lowest since March 2009 when the UK economy was in recession following the financial crash. Anything below 50 signals contraction. |
| The purchasing managers' indices, or PMIs, track services sector companies, manufacturers and building firms around the world. | |
| They measure activity, output, business confidence and hiring levels, to produce a health check on how these sectors are performing. | |
| PMIs are compiled each month from interviews with 'purchasing managers' at thousands of companies. They produce a single headline figure – anything above 50 indicates a sector is growing, while a figure below 50 shows a contraction. | |
| Economists watch these surveys closely as they look ahead to coming months, while the official data, such as gross domestic product and retail sales, tends to be more backward-looking. | |
| The headline index, which measures total activity in the sector, showed construction fell for a fourth consecutive month, again led by office building and general maintenance. It fell to 45 in August, down from 45.3 in July and well below the 48.4 expected by City analysts. | The headline index, which measures total activity in the sector, showed construction fell for a fourth consecutive month, again led by office building and general maintenance. It fell to 45 in August, down from 45.3 in July and well below the 48.4 expected by City analysts. |
| The level of new work has declined since April in line with official figures, which last month showed the sector contracted in the second quarter of the year. | The level of new work has declined since April in line with official figures, which last month showed the sector contracted in the second quarter of the year. |
| In spite of the contraction and weak outlook, firms hung on to staff and maintained recruitment plans. The survey reported evidence of a widespread shortage of staff since the Brexit vote that prevented employers from making staff redundant. | In spite of the contraction and weak outlook, firms hung on to staff and maintained recruitment plans. The survey reported evidence of a widespread shortage of staff since the Brexit vote that prevented employers from making staff redundant. |
| Analysts said a Brexit deal was unlikely to revive the industry before the end of the year following a dive in confidence in construction industry boardrooms. | Analysts said a Brexit deal was unlikely to revive the industry before the end of the year following a dive in confidence in construction industry boardrooms. |
| IHS Markit economist Tim Moore said: “Construction companies noted that rising risk aversion and tighter budget-setting by clients in response to Brexit uncertainty had held back activity, particularly in the commercial sub-sector. | IHS Markit economist Tim Moore said: “Construction companies noted that rising risk aversion and tighter budget-setting by clients in response to Brexit uncertainty had held back activity, particularly in the commercial sub-sector. |
| “Commercial construction activity fell at a steep and accelerated pace during August, which more than offset the softer rates of decline in house building and civil engineering work.” | “Commercial construction activity fell at a steep and accelerated pace during August, which more than offset the softer rates of decline in house building and civil engineering work.” |
| Likening the industry to an oil supertanker, Duncan Brock, a spokesman for the Chartered Institute of Procurement & Supply, said a turnaround would not come until 2020, even if the current Brexit conflict could be resolved amicably. | Likening the industry to an oil supertanker, Duncan Brock, a spokesman for the Chartered Institute of Procurement & Supply, said a turnaround would not come until 2020, even if the current Brexit conflict could be resolved amicably. |
| “The reality is, if a revival of confidence and a flood of new orders return to the construction sector in the coming weeks, much like a large tanker turning in a dock, there is little room for the sector to improve in the last quarter of the year. It’s likely September’s data will be even more discouraging,” he said. | “The reality is, if a revival of confidence and a flood of new orders return to the construction sector in the coming weeks, much like a large tanker turning in a dock, there is little room for the sector to improve in the last quarter of the year. It’s likely September’s data will be even more discouraging,” he said. |
| Brock added: “As Brexit creeps closer and confusion still reigns, this will undoubtedly heap more pressure on the UK government to create much-needed clarity in the market. The commercial sector particularly has been devastated by reluctant clients fearful of taking a wrong turn in a confusing landscape and delaying project starts, resulting in the fastest drop in new orders since March 2009.” | Brock added: “As Brexit creeps closer and confusion still reigns, this will undoubtedly heap more pressure on the UK government to create much-needed clarity in the market. The commercial sector particularly has been devastated by reluctant clients fearful of taking a wrong turn in a confusing landscape and delaying project starts, resulting in the fastest drop in new orders since March 2009.” |
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