UK construction suffers biggest drop in activity since Brexit vote due to snow disruption in March

The latest Purchasing Managers’ Index for the sector came in at 47, down from 51.4 in February and below the 50 point which separates expansion from contraction

Ben Chu
Economics Editor
@Benchu_
Wednesday 04 April 2018 10:39
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A wave of cold weather from Russia, bringing heavy snowfall, hit the UK in February. Another freezing wave, nicknamed the ‘Mini Beast from the East’ hit the UK in March
A wave of cold weather from Russia, bringing heavy snowfall, hit the UK in February. Another freezing wave, nicknamed the ‘Mini Beast from the East’ hit the UK in March

The UK construction industry suffered its biggest drop in activity since the 2016 Brexit vote in March thanks to severe weather disruption due to the “Beast from the East”.

The latest Purchasing Managers’ Index (PMI) for the sector came in at 47, down from 51.4 in February and below the 50 point which separates expansion from contraction.

City of London analysts had pencilled in a reading of 50.8.

Civil engineering saw its biggest drop in activity in five years. Commercial construction also fell sharply. Housebuilding, however, fared better in the month.

“Snow-related disruption was a key factor behind the marked decline in activity on site reported by survey respondents,” said Tim Moore of IHS Markit, which compiles the survey.

Biggest drop since Brexit vote

The latest estimate from the Office for National Statistics is that construction, which accounts for around 6 per cent of GDP, grew by 5.7 per cent in 2017, although it contracted by 0.1 per cent in the final quarter.

In the immediate wake of the June 2016 Brexit vote the construction PMI sank from 51.2 to 46 as builders and investors put projects on immediate hold.

However, by September, the index had bounced back sharply as general confidence recovered.

A wave of cold weather from Russia, bringing heavy snowfall, hit the UK on 24 February 2018. Another freezing wave, nicknamed the “Mini Beast from the East” hit the UK on 17 March.

The latest PMI survey also showed new orders contracting for a third successive month.

“Though March’s figures could be viewed as a temporary blip, without a strong pipeline of work, and strong risk strategies in place, the sector’s health remains in question as we’re still a long way off seeing it operate the way it has over the last year,” said Duncan Brock of the Chartered Institute of Procurement & Supply.

On Tuesday the PMI for manufacturing in March was reported to be 55.1, signalling that output in the sector slowed sharply in the first quarter of 2018.

The March PMI for the UK’s dominant services sector will be released on Thursday.

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