UK construction sector activity contracted for the first time in 13 months in September, as uncertainty over Brexit weighed, a key survey has revealed.
There were sharp drops in civil engineering and commercial property development activity, according to the survey published yesterday by the Chartered Institute of Procurement & Supply (CIPS).
And, although housebuilding activity continued to expand, the pace of growth of this construction sub-sector eased to its weakest pace in six months amid worries among companies about less favourable market conditions ahead.
Civil engineering activity showed its sharpest fall since April 2013, with firms linking this decline to a lack of new infrastructure projects to replace completed contracts.
The latest decline in work on commercial property development projects was the second-sharpest since February 2013, CIPS observed, exceeded only by the post-European Union referendum dip seen in July last year. In this context, CIPS noted survey respondents had commented widely on a “headwind from political and economic uncertainty, alongside extended lead times for budget approvals among clients”.
The decline in overall UK construction activity in September, as well as being the first in 13 months, was the sharpest since July last year, in the immediate aftermath of the Brexit vote.
CIPS’s construction purchasing managers’ index, which measures activity, dropped from 51.1 in August to 48.1 in September on a seasonally-adjusted basis, falling below the level of 50 deemed to separate expansion from contraction. Economists polled by Reuters had forecast a September reading of 51. The UK construction sector also recorded an overall fall in new orders last month.
Duncan Brock, CIPS’s director of customer relationships, said: “A dismal picture of construction emerged…as the sector showed signs of worsening business conditions across the board.
“Respondents pointed to obstructive economic conditions and the Brexit blight of uncertainty, freezing clients into indecision over new projects. Even housing, the stalwart of the sector, stuttered.”
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