Housing Project

Housebuilding slowdown dampens construction industry recovery

A slowdown in housebuilding across the UK has put a drag on the construction industry’s recovery, according to figures that also showed new orders across the sector had slowed.

Builders blamed the uncertainty surrounding the government’s Brexit talks for a jittery housing market and their response, which was to complete fewer homes than planned.

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However, a surge in infrastructure work and civil engineering meant the sector bounced back from a six-month low in September, though not to higher levels of activity seen in July.

The IHS/Markit purchasing managers’ index (PMI) for the construction industry improved to 53.2 in October after dipping to 52.1 in September, from 52.9 in August and a 14-month high of 55.8 in July. A level above 50 indicates an an expansion in output.

One analyst said the industry was “punch drunk” from buffeting it had received over the past couple of years following severe winters that had brought activity to a standstill only to be followed by surges in confidence about the outlook.

Blane Perrotton, the managing director of surveyors Naismiths, said: “After months of see-sawing demand and confidence, the construction industry is getting increasingly punch drunk – with sentiment flat on the canvas.

“This latest PMI gives a typically contradictory snapshot of the health of the sector. Output is picking up but new orders are dwindling – which broadly translates as ‘hurry up and wait’.”

The latest data from the Office for National Statistics follows a similarly volatile path. It showed construction output up 0.3% year-on-year in September following a dip of 0.7% month-on-month in August. This followed robust gains over the previous three months that meant output was up 2.9% in the three months to August compared with the three months to May.

Howard Archer, the chief economic advisor to the EY Item Club, said October’s reading was below the third-quarter average of 53.6: “While construction activity improved in October, there was a disappointing softening in new orders which grew at the slowest rate since May. This was reportedly influenced by concerns over Brexit and the economy.

“Further worrying news saw construction companies’ confidence about output prospects for the next 12 months weaken to the lowest level for nearly six years.”

Nevertheless, building companies are still on the lookout for more staff to overcome shortages that have been exacerbated by the Brexit vote and a decline in the number of skilled migrants from eastern Europe looking for work.

Source: The Guardian

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