Construction buyers report biggest new work drop in a decade

Grant Prior 5 years ago
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Construction buyers have reported the sharpest drop in new work since March 2009.

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

New orders received by construction companies 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.

Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey said: “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.

“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.”

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