“Construction needs someone to fight its corner” as sector suffers another slip

Another fall in commercial work and civil engineering activity in March has led industry bosses to fear that the recent weakness of the UK construction sector may not be just a blip, but a sustained soft patch.

It comes as construction firms in the UK saw workloads slip for the second month in succession in March. The IHS Markit/CIPS UK Construction Total Activity Index posted 49.7, up fractionally from 49.5 in February but still below the 50 no-change threshold. A reading above 50 on the survey indicates growth.

The decline in total construction activity represented the first back-to-back fall in output levels since August 2016, although the rate of decline remained only marginal in March. Commercial construction was the worst performing area during the latest survey period, with business activity dropping to the greatest extent since March 2018.

Residential building bucked the downward trend seen across the wider construction sector in March. The latest upturn in housing activity was only modest, but still the strongest seen so far in 2019.

Commenting, Joe Hayes, economist at IHS Markit, which compiles the survey, said: “Brexit-related uncertainty continued to generate indecisiveness, ultimately hitting order book volumes. Furthermore, strong competition for contracts was also reported by some panel members. The outlook was subsequently underwhelming by historical standards, with the unsettled political and economic environment keeping business confidence below its long-run average.”

Responding to today’s figures, KPMG’s UK head of infrastructure, building and construction, Jonathan White, believes that until Brexit is resolved, order books should not be expected to pick up but housebuilding will likely remain the key source of activity for the foreseeable future.

“There continues to be a stall on investment plans across the construction sector, especially in commercial work, and until the Brexit conundrum is resolved we don’t expect order books to pick up, White said. “It’s going to be a similar story for the months to come as we wait for more clarity to help make informed business decisions.  Liquidity remains tight, and as a result, firms are keeping an even closer eye on their balance sheets. In an already fragile sector the boat can easily be rocked, as we’ve seen with recent headlines.”

Last week, the minister responsible for construction became the latest in a long list of ministerial resignations over the government’s handling of Brexit meaning the sector remains without a figurehead to drive the sector’s best interests.

Taking this into consideration, Mark Robinson, Scape Group’s chief executive, says it’s vital a construction minister who is prepared to fight for the best outcome is established as soon as possible.

Robinson said: “Ministers are treating Brexit negotiations like a game of chess. But as it stands, nobody is a winner. The decline in civil engineering and commercial construction is especially concerning, but unsurprising. 

“For months we have been seeing a reluctance for clients to break ground on essential projects. While there continues to be no majority in Westminster, as an industry we need to come together to make sure that Britain remains an attractive place to live and invest. Crucially we must press ahead with new work to upgrade vital infrastructure, improve road and rail connections and deliver new homes.”