UK construction is stagnating amid uncertainty about the country’s departure from the European Union, a survey has revealed.
Back-to-back monthly falls in output levels were recorded by the IHS Markit/CIPS UK Construction Total Activity Index for the first time since August 2016.
The report also highlights the fact that construction firms are stockpiling materials ahead of Brexit.
In an explanation of the March results, HIS Markit said: “Another fall in commercial work and civil engineering activity more than offset a modest upturn in residential building.
“New business and employment numbers increased only slightly at the end of the first quarter, reflecting subdued underlying demand and delays to decision-making among clients.”
“Brexit-related uncertainty continued to generate indecisiveness, ultimately hitting order book volumes,” said HIS Markit economist Joe Hayes.
“Nevertheless, UK construction businesses ramped up their purchases of materials and other inputs, reflecting efforts to build safety stocks ahead of any potential Brexit-related disruptions. As such, supply chain constraints persisted and average input lead times lengthened once again.”
In the March survey period, commercial construction was the worst performing area, as business activity dropped by its biggest margin since March 2018.
“There were widespread reports that Brexit uncertainty and concerns about the domestic economic outlook had led to risk aversion among clients,” IHS Markit claimed.
Civil engineering activity also fell in March, but the rate of decline has slowed down since February.
Group director at the Chartered Institute of Procurement & Supply Duncan Brock said: “The situation in the UK construction sector was broadly unchanged from February, with PMI data posting a second consecutive month in contraction. The fault of this continuing inertia was placed squarely at the feet of Brexit.
“Not even a small rise in job creation, optimism and new orders, nor resilient house building, were enough to buck the underlying downward trend in a sector suffering from client hesitation and consumer gloom.
“There was also intense competition from other sectors, with the stockpiling of supplies increasing delivery times and creating raw material shortages, all adding to the pressures. Given the lack of warehousing space in the UK and the difficulties of storing bulky items, it is evident the sector has pressed the panic button in its attempt to keep projects moving during the political impasse.
“It is unlikely that next month will bring about any positive news given the challenges of a weaker UK economy, volatile pound and intense competition for new orders, as Brexit continues to cast a long shadow over the sector’s future.”
Last month, a report also revealed that more than a third of Northern Irish construction firms would make redundancies if political uncertainty caused by the collapse of the country’s government and Brexit were not resolved soon.
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