UK Construction Sector Suffers Contraction

The latest construction purchasing managers index (PMI) from IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) revealed that the UK’s construction sector contracted during May.

Overall, the industry posted a score of 48.6, below the 50.0 no-change mark and down on the 50.5 recorded in April.

Commercial construction is the worst performing sector, with output in this area falling by its greatest amount since September 2017. Civil engineering also suffered a contraction, with activity declining for the fourth consecutive month.

Although activity in the residential house building sector continued to grow, it did so at a slower pace than in the past three months. As a result, it wasn’t enough to boost the construction sector overall into positive territory.

Those surveyed reported that clients are hesitant to commit to large projects and that the sales conversion process is typically taking longer.

Group director at the CIPS Duncan Brock commented: “With the continuing uncertainty around Brexit and instabilities in the UK economy, client indecision affected new orders which fell at their fastest since March 2018 and particularly affected commercial activity.”

With the new deadline for Brexit pushed back to 31 October this year, there could be several more months of decline as businesses continue to hold off on making any large financial decisions until the political landscape becomes more stable.

But Brexit isn’t the only thing costing construction firms money. In April, a survey found that an average of £1,500 is spent per employee filling in physical paperwork in the construction sector. Re-flow, which carried out the research, argued that firms should look at digital solutions to save time and effort, rather than insisting on physical paperwork being filled in.

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