UK construction growth slowed in January to its weakest in the current 10-month run of expansion as Brexit-related anxiety and worries over the domestic economic outlook weighed – prompting a recession warning for the sector.
The Chartered Institute of Procurement & Supply’s survey, published yesterday, also shows that employment growth in the UK construction sector almost ground to a halt in January, with job creation at its weakest since July 2016.
The survey highlights delays in decision-making on new construction projects because of “anxiety” over Brexit.
CIPS’s total activity index for the UK construction sector dropped from 52.8 in December to 50.6 last month on a seasonally adjusted basis, remaining only marginally above the level of 50 deemed to separate expansion from contraction.
Although housebuilding was the strongest construction sub-sector last month, its expansion was only modest and the weakest since March last year, when activity was hit by severe winter weather.
Civil engineering activity increased only marginally last month.
And commercial property construction work declined in January for the first time in 10 months, as fears of a no-deal Brexit swirled.
CIPS said: “Anecdotal evidence suggested that Brexit-related anxiety and associated concerns about the domestic economic outlook continued to weigh on client demand.”
Tim Moore, economics associate director at survey compiler IHS Markit, said: “Delays to client decision-making on new projects in response to Brexit uncertainty was cited as a key source of anxiety at the start of 2019.”
Duncan Brock, group director at CIPS, said: “The sector suffered a sharp drop in output growth in January, and the softest rise in purchasing volumes since September 2017, as Brexit continues to hamper progress and dampen client confidence.”
Mr Brock added: “The biggest shock came in the form of job-creation, which has managed to suffer the slings and arrows of Brexit highs and lows with solid hiring since the referendum result.
“Employment rose at the slowest rate since July 2016 and, with optimism also in short supply, the sector only needs a small nudge to tip it closer to recession.”
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