Buyers report constructions biggest work drop in decade

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The latest Construction Total Activity Index for August collected by IHS Markit/CIPS shows that Uk Construction registered 45 – down slightly from 45.3 in July and below the 50 no-change threshold for the fourth consecutive month.

Key Findings

  • Construction activity falls for the third month in a row
  • Sharp drop in new work and purchasing activity during July
  • Business optimism slides to its lowest since November 2012

 

New construction orders received  have dropped in each month since April and August saw the fastest rate of contraction since March 2009.

Anecdotal evidence suggested that weak demand conditions had led to a lack of tender opportunities and strong competition for new work, particularly in the commercial sub-sector.

Firms also indicated that their business expectations for the year ahead weakened sharply since July and were the least upbeat since December 2008.

Total construction activity index

Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey commented saying: “Domestic political uncertainty continued to hold back the UK construction sector in August, with survey respondents indicating that delays to spending decisions had contributed to the sharpest fall new work for over 10 years.

“Construction companies noted that rising risk aversion and tighter budget setting by clients in response to Brexit uncertainty had held back activity, particularly in the commercial sub-sector.

“Commercial construction activity fell at a steep and accelerated pace during August, which more than offset the softer rates of decline in house building and civil engineering work.

Housing commercial and civil engineering graph
Housing commercial and civil engineering graph

“Concerns about softening demand for new projects resulted in a fall in business optimism across the construction sector to its weakest since December 2008.

“This provides an early signal that UK construction companies are braced for a protracted slowdown as a lack of new work to replace completed contracts begins to bite over the next 12 months.”