Coronavirus ‘knocked wind out of construction’

posted by Charlie Hart
6 May 2020

The UK construction sector experienced the fastest decline in output in 23 years, according to the latest PMI.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index fell from 39.3 in March to just 8.2 in April, signalling a rapid downturn in overall construction output due to widespread site closures and shutdowns across the supply chain in response to coronavirus. Readings above 50 indicate growth and those below 50 signal contraction.

The April reading was the lowest since data was first collected in April 1997. The previous record low was 27.8 in February 2009. 

The three main categories of construction work experienced record falls including house building (7.3), commercial activity (7.7) and civil engineering (14.6). Lower volumes of output were attributed to business closures in April. Survey respondents commented on complete stoppages of activity on-site due to the Covid-19 pandemic.

The severe impact on construction supply chains was also highlighted, as closures at builders' merchants and suspended manufacturing production led to widespread supply shortages.

Average lead times for the delivery of construction products and materials was the steepest since the survey began. Three-quarters of the survey panel reported longer delivery times from suppliers in April, with a lack of availability for safety products also frequently reported by construction companies.

Duncan Brock, group director at the CIPS, said: “April’s figures delivered more worrying news for fragile construction businesses as the effects of the coronavirus continued to ripple across supply chains, devastating all productivity in its wake. Though a fall in output was not a complete surprise, the scale and suddenness of the drop has knocked the wind out of building work in the UK.

“More vulnerable than other sectors that make up the UK economy, construction was unable to continue in any significant capacity, as companies grappled with furloughed staff and building sites under complete shutdown.

“Only a few civil engineering and infrastructure projects were able to continue in April, but a tentative restart is expected in other areas such as house building and commercial construction in the short term. As new plans from policymakers are developed over social distancing, building work may continue but not as we know it as restrictions and new safety rules are likely to make progress more difficult. 

“For a sector still not fully recovered from the skills shortages created by the financial crisis in 2008, the vacuum of output created by the pandemic has knocked the sector back another decade.”

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