Home Business News Construction activity falls sharply

Construction activity falls sharply

by LLB Editor
2nd Oct 19 10:46 am

Building activity has fallen sharply, according to the closely-watched IHS Markit/CIPS survey.

The survey said September building activity “fell at the second-fastest rate since April 2009, only narrowly outpaced by June’s decline.”

Gareth Belsham, director of the national property consultancy and surveyors Naismiths said, “The vice is being ratcheted ever tighter. Falling demand from investors and brutal, margin-slashing competition among contractors have sent confidence skittling.

“Many contractors are now fighting on two fronts, and are being squeezed by rising input costs just as new orders fall sharply.

“With order books for the coming months getting steadily thinner, the slide in confidence is forcing some to cut costs wherever they can – and staffing levels are now being reduced at their sharpest rate since 2010.

“Through bitter experience, Britain’s construction sector has become adept at riding out both feast and famine. But even by its volatile standards, the rapid slowdown in demand is causing concern.

“After more than three years of gnawing uncertainty, the prospect of a Brexit deal – any Brexit deal – is still glistening like a mirage. Whether the coming weeks will miraculously deliver one is still open to question.

“What is beyond doubt is that the confidence-sapping inertia has led many developers to freeze investment, and the steady fall in new orders is inflicting ever greater pain on Britain’s builders.

“But there is only so long moth-balled projects and deferred investment decisions can be held back. The priority for the industry now is to ride out the storm and retain enough capability to cope with the day – whenever it comes – that demand snaps back to more normal levels.”

Markus Kuger, Chief Economist at Dun & Bradstreet said, “Although most of Western Europe is showing increasing level of stress against the backdrop of slowing global growth and an escalating trade war, the additional risk of an un-managed Brexit is impacting business optimism in the UK.

“Across Europe, the latest PMI figures for the construction and manufacturing sectors stand well below the neutral 50-points line that delineates expansion from contraction. Order books are depleting and employment levels are falling, although the manufacturing PMI in the UK was buoyed somewhat by increased stockpiling ahead of a potential no-deal scenario.

“With political tensions high ahead of the 31 October Brexit deadline, it is highly likely that business confidence will continue to waver and lead to further adverse impacts on the economy. In line with the continued uncertainty, Dun & Bradstreet is maintaining its ‘deteriorating’ risk outlook and ‘medium risk’ rating for the UK economy.”

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