Coronavirus outbreak triggers fastest rate of job losses

Construction activity has declined at the fastest rate in more than a decade since the coronavirus pandemic began.

Public health measures to halt the spread of covid-19 led to stoppages of work on site and a slump in new orders, according to the latest IHS Markit/CIPS construction PMI.

london cranes

The Battersea Power Station redevelopment is shut until the end of this month

Mark Robinson, Scape Group chief executive, said the data gave an early indicator of just how damaging the effects of the covid-19 pandemic would be on construction.

Robinson said: “The outbreak struck at a time when the industry was gaining real momentum, with the fastest expansion in a year recorded last month, but now it’s been stopped dead in its tracks.

“While the outbreak will only be temporary, the effects on construction will be long lasting unless clients and tier 1 contractors do all they can now to protect their supply chain partners. There remains a significant volume of key infrastructure, housing and commercial projects that UK plc will need more than ever after this crisis to attract investment and provide a platform for recovery.”

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He added that accelerating payments and settling dated debt needed to be a priority for clients to safeguard the businesses in their supply chain.

The IHS Markit/CIPS UK construction activity index dropped to 39.3 in March from 52.6 in February, to signal the steepest fall in construction output since April 2009 – the height of the last recession – with survey respondents overwhelmingly attributing reduced activity to the impact of the coronavirus pandemic.

Civil engineering activity saw the steepest rate of decline, followed closely by commercial building work.

Residential activity dropped at a comparatively modest pace in March, but construction companies said they were expecting a slump in house building from stoppages on site.

New work received by construction companies fell at a sharp rate in March, with the downturn in order books the fastest recorded by the survey since August last year.

The latest survey also indicated the steepest pace of job shedding since September 2010, while construction companies recorded intense supply chain pressures in March as the covid-19 crisis resulted in reduced capacity and shortages of stock among vendors.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said the worst was still to come for construction.

He said: “With no upturn in sight, and with the fastest level of layoffs since September 2010, the sector is stuck in quicksand and sinking further.

“Though lower commodity prices will bring some relief for those that can source a limited number of materials amidst disrupted supply chains, this will be cold comfort without sites to work in and staff available as health concerns remain. The brutality of this impact cannot be underestimated, and the sector has not hit rock bottom yet.”

The latest lengthening of lead-times among vendors was the steepest recorded since October 2014.