IHS Markit/CIPS PMI shows continued drop in construction output as Brexit still bites

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IHS Markit:CIPS
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The latest IHS MARKIT/CIPS UK construction PMI reveals that overall volumes of construction work have fallen for the sixth consecutive month. Anna Tobin reports

The October IHS MARKIT/CIPS UK construction PMI highlighted a sustained decline in UK construction output, with overall volumes of work falling for the sixth month in a row. It also showed a sharp drop in new work and that construction companies continued to reduce their workforce, this is linked to weak order books for new work and concerns about their business outlook.

The construction companies surveyed said that client demand remained subdued in response to domestic political uncertainty and the economic backdrop, and unseasonally wet weather in October also didn’t help. There were also reports of increased competition for new work resulting in more price discounting to secure contract awards.

Lower volumes of work were recorded across civil engineering, house building and commercial construction and business optimism for the year-ahead is at its weakest since 2012.

“With a fall in civil engineering not seen for a decade and the biggest drop in housebuilding since 2016, it appears that strength in the sector is seeping away,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply. “Jobs hiring suffered as businesses unsure of the Government’s next steps held back on their development plans, which were weakened further by stronger competition for fewer opportunities. Future optimism remained at 2012 levels as the deep-seated Brexit gloom dampened down expectations.

“To say these figures are disappointing is a big understatement. Given that the next political hurdle is December’s General Election, all eyes will be on the new administration and clear direction, because at the moment there is little insight into what could possibly pull the sector out of its ditch.”

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