Construction confidence at five-year low

Will Green is news editor of Supply Management
2 November 2017

The UK construction sector returned to growth in October but business confidence has dropped to an almost five-year low.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index climbed to 50.8 in October, up from contraction of 48.1 in September and against the neutral 50 reading.

The slight recovery was led by the housing sector, while growth in commercial building and civil engineering shrunk.

However, expectations for business activity over the year ahead dipped to a 58-month low, linked to concerns about UK economic performance and a lack of new projects in the pipeline.

Intense supply chain pressures were recorded, driven by low stocks and constrained capacity among vendors.

Duncan Brock, director of customer relationships at CIPS, said: “Though construction orders have shown a small improvement for the first time in four months, the sharp fall in business confidence will send a chill down the spine.

“With the lowest optimism since December 2012, purchasing managers blamed a slowdown in work from commercial clients, vanishing civil engineering projects and an increasing weariness over Brexit for the lack of performance, weak pipelines and slowdown in job hires.”

He added: “Supply chains were under the cosh again this month, as buyers struggled to get the materials and products they needed due to low stocks and squeezed supply, exacerbated by increased construction demand in the eurozone. There were also reports of increasing shortages in some raw materials which slowed work already underway.”

Tim Moore, associate director at IHS Markit, said: “Greater house building was the sole bright spot in an otherwise difficult month for the construction sector. Sustained declines in civil engineering and commercial activity meant that large areas of the building industry have become stuck in a rut.”

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