Construction sector 'stuck in quicksand'

6 April 2020

UK construction output saw its fastest fall for almost 11 years in March as the government’s coronavirus lockdown led to stoppages on building sites and a slump in new orders.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index dropped to 39.3 in March from 52.6 in February, against the neutral 50 reading and marking the steepest fall in output since April 2009.

Emergency public health measures to halt the spread of the outbreak were overwhelmingly blamed for reduced activity.

All three broad categories of construction work saw output declining, with civil engineering activity seeing the steepest rate of decline.

New work also fell sharply in March with the fastest fall in order books since August 2019. Clients had expressed concerns about the feasibility of starting new projects during the outbreak, survey respondents said.

And lower workloads and business closures have led to falling staffing numbers across the sector, with jobs being shed at their fastest rate since September 2010.

Construction companies are also seeing intense supply chain pressures as lead times lengthen by the most seen since October 2014, capacity is reduced and vendors suffer stock shortages.

Costs continue to rise but commodity prices have softened due to lower demand.

Duncan Brock, group director at CIPS, said: “The battered construction sector was offered a brief respite in February with a marginal rise in output after a difficult year.”

But he said any hope of a continuation of growth was “mercilessly bulldozed away” in March.

He added that “with no upturn in sight, and with the fastest level of layoffs since September 2010, the sector is stuck in quicksand and sinking further”.

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