Construction buyers report loss of momentum

Grant Prior 6 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

Keltbray gets start date for £50m motorway upgrade

Contractor hails "significant step forward" for highways business
11 hours ago

Site workers settle for 5% pay increase

Contractors and unions agree one-year deal following months of talks
1 day ago

Rising wages and skills gap to overshadow materials issues

Materials and product Inflation tops 20% so far this year, but labour set to be next big headache
15 hours ago

Erith pays £2.8m bonus to staff after ownership switch

Around 450 staff have on average received over £6,000 since move to employee ownership five years ago
16 hours ago

Algeco lands £19.2m Leeds modular school scheme

Offsite specialist will supply and install 192 steel frame modules
16 hours ago

Eight firms placed on £750m Midlands and Eastern framework

Next generation framework for jobs up to £7.5m employs a parallel plotting structure
16 hours ago

Aston Villa unveil plans for £100m stadium expansion

Construction set to start next year on first phase of Villa Park upgrade
15 hours ago

Skanska bans ‘swing-up’ lorry loaders after site death

Banned vehicles are used mainly to deliver bulky items like cabins and welfare units
1 day ago

HS2 agrees £78m variation on Euston tunnels cost

Skanska Costain Strabag seals extra payment for agreed changes to the scope of work
2 days ago

B&K breaks ground at £150m Newcastle HMRC job

Work gets underway on city's largest ever office project
2 days ago

New building safety laws come into force today

Leaseholders protected and new regulator for construction product manufacturers in wake of Grenfell
2 days ago

Peel submits plan for £150m cannabis production plant

Isle of Man seeks to become a leader in the emerging medicinal cannabis sector.
2 days ago

Tarmac buys first electric concrete mixer truck

Country's first battery powered mixer truck will start site deliveries this Autumn
2 days ago

Tilbury Douglas wins Dorset hospital upgrade

Construction could start in 2024 after Dorset County Hospital secures £77.3m of funding
2 days ago

McGee in £2.4m provision for bid-rigging probe

Demolition contractor says provision will cover the expected fine over cover pricing ring
3 days ago

First designs for £275m HS2 Midlands nerve centre

Contractor due to be named in Autumn next year for Washwood Heath hub
3 days ago

London Bankside Yards next project switches from resi to offices

Revised plan submitted for 18-storey office next to Blackfriars Bridge
3 days ago

Plans in for Cambridge North major mixed-use scheme

Over 400 homes and nearly 600,000 sq ft of office and shops planned for railway sidings site
3 days ago

Barratt falls foul of planners on £25m estate

Council acts after residents complain about construction deliveries
3 days ago

VolkerHighways and WJ Group shot blast roads with steel

Latest retexturing technique provides benefits all round
3 days ago

Ten demolition firms named in cartel probe

Biggest names in demolition face massive fines over "unacceptable" behaviour on 19 contracts worth over £150m
6 days ago

Imtech vows to avoid big resi jobs after return to profit

Engineering services arm puts trio of loss-making residential jobs behind it
6 days ago

Sisk replaces Morgan Sindall on £1bn Midlands Highways Alliance

Four firms secure places in Midlands framework renewal race
7 days ago

Winvic wins Bristol Redcliff Quarter 468 flats job

Grainger buys planned build to rent project and brings in Winvic to start this Autumn
6 days ago

Peel takes on Wirral Waters after Urban Splash modular collapse

Developer is reviewing whether to return to traditional build methods after modular specialist collapse
6 days ago

Kier launches £80m JV to build 2,000 homes by 2027

Property arm JV with Lloyds fund to develop housing on urban brownfield sites
1 week ago

Mace chief Reynolds replaces Mitchell at CLC

Mark Reynold takes over as co-chair of the Construction Leadership Council
6 days ago

Cost inflation forces bid rethink for £200m M5 junction 10

ECI simplified and amendments made to reflect rising construction costs
7 days ago

Wages among key trades keep pace with cost of living rise

Self employed plasterers, plumbers, roofers and scaffolders enjoy wage rises ahead of annual inflation rate
7 days ago

Midgard drives recovery at JRL Group

Revenue tops £600m again at diversified contractor
1 week ago

Contractor services