Construction buyers report loss of momentum

Grant Prior 8 years ago
Share

Construction buyers reported the lowest level of output growth for three years in April.

The latest Markit/CIPS UK Construction PMI index reading fell to 52 in April from 54.2 the previous month.

The index has been reading above the critical 50 mark – showing growth – for three years but April’s figure showed the slowest rise since mid 2013.

Construction companies cited a number of factors weighing on client spending, including uncertainty about the economic outlook and a general unwillingness to commit to new projects.

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said:“Although UK construction grew marginally in April, clouds of uncertainty are hovering overhead, depressing the industry’s outlook.

“Business activity expanded at its weakest pace since June 2013, clearly pointing to a loss of momentum in the sector.

“Fears over weaker UK and global economic growth dealt a blow to confidence in the construction sector, leading to delays in new spending commitments.

“The prospect of the EU referendum and its outcome in June are likely to add to uncertainty too, with many construction firms preferring to wait and see what happens before making any decisions.

“Construction companies adopted a more cautious approach to purchasing and hiring, leading to a rise in subcontractor usage to tide them over until the outlook becomes clearer.

“The slowdown in new order growth in April suggests that though spring may be in the air, sunnier times may still be a way off for the construction sector, at least for the time being.”

Mike Chappell, Global Corporates managing director for construction at Lloyds Bank Commercial Banking, said: “Despite a backdrop of uncertainty in the wider UK trading environment, construction remains relatively stable compared to previous years, despite the drop in this data.

“The past couple of months have seen a number of the sector’s major commercial players report robust results with an upbeat outlook as the sector continues to make progress in improving margins and ensuring order books consist of sustainable work, with troublesome legacy contracts being worked through.

“Meanwhile, with the UK this week ranked among the top 10 countries in which to invest in infrastructure – aided by the current roll-call of major schemes in the pipeline – the industry should carry on performing well.

“The note of caution comes from remembering that construction’s fortunes are tied inexorably to that of the wider UK economy, though the hope is that more certainty in the second half of the year provides a boost to output levels.”

Kalpana Padhiar, construction specialist at global credit insurer Euler Hermes, said: “The new figures are likely to be a direct result of the uncertainty surrounding June’s referendum, which is having a similar impact on activity across the sector to what we saw in last year’s pre-election lull.

“The Construction Products Association has already downgraded the industry growth forecast for the third time in the last six months, and with UK and international investors holding off any decisions on new projects until July at the earliest, significant improvement in the short-term is unlikely.

“Firms should look to manage their credit books carefully.”

Latest news

Director jailed for exposing workers to asbestos

Ten tonnes of asbestos insulating board stripped out by unqualified workers
3 hours ago

Site labour rates start rising again

Industry's biggest payroll firm says "it feels like things could be turning round"
7 hours ago

Council finds extra £33m for Buckinghamshire link road

South East Aylesbury Link Road costs soar by nearly 30% to £147m
7 hours ago

Quartet win £490m North West & Central railway works deal

Skanska, Kier, Octavius Infrastructure and Story Contracting bag major projects deal
7 hours ago

Unite Students plans first major mixed-use scheme

Developer's first mixed BTR and PBSA project to be built in Edinburgh
23 hours ago

Galliford Try names new finance director

Rentokil's Kris Hampson joins contractor to replace Andrew Duxbury
8 hours ago

Council boss hits out at bat threat to £274m road job

Natural England could scupper scheme due to be built by Ferrovial
8 hours ago

Hydrogen-fuelled diggers to be allowed onto highways

Government to raise barrier to widespread use of hydrogen fuelled plant in construction
24 hours ago

Plans in for £118m Government hub in Darlington

Work pencilled to start later this year on new home for 1,450 civil servants
23 hours ago

New contractor highlights Henry Construction jobs on website

New firm lists jobs by failed contractor to show its experience
1 day ago

Contractors line up for £2.6bn Anglian Water AMP8 deal

Eight big names land places on pioneering @one Alliance
2 days ago

McAleer & Rushe bags first major later living project

Work to start this month on 167-flat Royal Tunbridge Wells project
1 day ago

Kier starts first all-electric prison houseblock job in Kent

Next-generation fully electric T60 prison houseblock to be built at HMP Elmley
1 day ago

Keepmoat sees better times ahead in housing market

Profits dip in 2023 despite construction of record number of new homes
1 day ago

Vistry signs partnership deals for 1,900 mixed tenure homes

West Sussex former airfield and Newmarket sites to break ground
2 days ago

Turnover at Wates tops £2bn for first time

Construction division exceeds £1bn turnover as average contract value hits record high of £48.3m
2 days ago

L&G looks to sell Cala Homes in exit from house building

Insurance giant reported to be preparing to offload 3,000 homes-a-year developer
3 days ago

Multiplex profit almost trebles as margin hits 5.5%

Revenue jumps 20% to £675m as big London scheme complete
2 days ago

TopHat puts plans to open huge Corby factory on hold

Advanced manufacturing facility was due to employ 1,000 people
2 days ago

Laing O’Rourke lands Calderdale hospital job

Enabling works to start by the end of this year at West Yorkshire site
2 days ago

Go-ahead for £475m Sunderland film and TV studios

Work to start this year on first phase Corwn Work studios
2 days ago

Willmott Dixon set for £20m Stockport Community Hub

Planning decision expected in June on Marple leisure and health clinic project
2 days ago

Police hunt for blundering dumper truck thief

Raider drove into a fence before getting stuck on a bank
2 days ago

Beattie Passive files administration notice

Passivhaus pioneer has been in business for more than ten years
3 days ago

McAlpine set for £50m space and tech centre

Northumbria Uni sign pre-con deal for new satellite research hub
3 days ago

VolkerFitzpatrick seals £34m Kent road viaduct

Work to start next year on Sturry Link Road near Canterbury
3 days ago

Eight win £600m Scottish civil engineering framework

Balfour, Farrans, Graham and Morgan Sindall win major works lot
3 days ago

Site engineer crushed to death by excavator

22-year-old victim died just months after graduating from university
5 days ago

NG Bailey fined £135,000 after hospital site death

Worker died after striking overhead beam while navigating a mobile elevating work platform
6 days ago

Kier lands £30m Mansfield Connect project

Construction to start in January 2025 on town centre regeneration scheme
3 days ago

Contractor services