Construction buyers at their glummest since April 2009
The construction sector has been hit by its biggest fall in a decade, with business activity and new work orders both tumbling at their fastest rate since the last recession.
Respondents to the latest IHS Markit/CIPS construction buyers survey for June blamed the slide on jittery clients delaying decisions on jobs.
The UK Construction total activity index fell even further below the no change 50 score in June to register 43.1 – down from the 48.6 posted in May.
Simon Rawlinson, head of strategic research at Arcadis, said businesses needed to heed the warning highlighted by the latest figures.
He said: “This [survey] highlights a big drop in confidence and is a major wake-up call for industry. All businesses should be reviewing their planning in the light of the weak business environment.”
The latest reading signalled the steepest reduction in overall construction output since the teeth of the recession in April 2009 and means the sector has contracted for four out of the past five months.
Commercial work levels fell for the sixth consecutive month and remained the worst performing area of construction activity, with the latest reduction the sharpest since December 2009. Survey respondents cited Brexit uncertainty and subsequent delays to project starts.
And civil engineering activity also declined, with the rate of contraction the fastest since October 2009 with domestic political uncertainty, delays to new projects and longer wait times for infrastructure contract awards all put the brakes on confidence.
Max Jones, relationship director at Lloyds Bank Commercial Banking’s infrastructure and construction team, said the government needed to give firm commitments on big-ticket jobs such as HS2, which is under threat of a review if Boris Johnson becomes prime minister later this month.
He said: “Negative headlines calling into question the future of large projects don’t make for pleasant reading. It’s clear the sector is eager for more certainty around the future of these.”
The fall in house building was the largest reported for three years, with weaker demand being blamed.
Jonathan White, UK head of infrastructure, building and construction at KPMG, said: “Further evidence of [housing] weakness this month will inevitably put more pressure on the commercial and infrastructure sub-sectors to bear the weight. Yet commercial is the area most exposed to the cycle of the UK economy.”