Activity grew in February for the first time since April 2019, according to IHS Markit/CIPS
Fears that coronavirus could sideline 20% of the UK’s workforce have dampened construction’s most positive month in more than a year.
Activity rose at its fastest rate last month since December 2018, according to the latest data from the IHS Markit/CIPS survey.
But there are growing fears the coronavirus outbreak could derail the turnaround.
The construction purchasing managers’ index increased to 52.6 last month from 48.4 in January, with a score above 50 indicating expansion for the first time since April last year.
But Jan Crosby, UK head of infrastructure, building and construction at KPMG said that coronavirus was a huge caveat to the positive news.
Crosby said: "This could incite a short-term dip in activity, which will make it all the more important to have medium-term clarity on the growth agenda, particularly if the sector suffers wider systemic issues as a result of self-isolation.
"It’s impossible to estimate the scale of the impact should the virus take a firm hold in the UK, but clearly it has the potential to deal a serious blow to a sector that has in recent years flirted with recession.”
His fears were echoed by both Scape Group chief executive Mark Robinson and Federation of Master Builders boss Brian Berry with the latter saying a 20% loss of workforce due to sickness could have major implications on capacity.
Despite fears around coronavirus, which has been a growing issue since December 2019, the latest PMI survey showed the sharpest rise in new orders since December 2015.
Anecdotal evidence mainly linked the recovery to a post-election improvement in business confidence and pent-up demand for new projects.
Survey respondents also pointed to greater tender opportunities and a boost from increased infrastructure contract awards, including those related to HS2.
Housing and commercial work saw the highest levels of business activity in February and the strongest expansion of house building activity since July 2018.
While the residential sector remained the best-performing construction category, civil engineering activity fell again during February, albeit the rate of decline was only marginal and the least marked for 13 month.
Government advice to business
- Businesses are encouraged to build their own resilience by reviewing their continuity plans. They are urged to follow the advice for employers on www.gov.uk.
- Those facing short-term cashflow issues (for example, as the result of subdued demand), are encouraged to use HMRC’s time to pay system. This is offered on a case by case basis if a firm or individual contacts the revenue about falling behind on tax.
- Department for International Trade teams continue to support British firms facing disruption around the globe. Officials are working with UK businesses on the ground to relay public health and travel advice, and to provide practical and concrete support.
- If the disease becomes established in the UK, remedial action is likely to include population distancing strategies, such as school closures, encouraging greater home working and cancelling large gatherings.
- Everyone will face increased pressures at work, as well as potentially dealing with their own illness or caring responsibilities. Supporting staff welfare will be critical.