UK construction activity subdued in October and confidence for next year falls

The balance of construction firms expecting an increase in business activity over the next 12 months eased to its weakest since December 2012 

Josie Co
Business Editor
Thursday 02 November 2017 10:47
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Commercial building activity decreased for the fourth consecutive month in October as a result of worries about the UK’s economic outlook
Commercial building activity decreased for the fourth consecutive month in October as a result of worries about the UK’s economic outlook

UK construction activity remained subdued in October and confidence that business would pick up over the next 12 months fell to its lowest level in almost five years, according to a survey.

Data from analytics company IHS Markit published on Thursday showed that output growth in the sector was largely confined to housebuilding last month, and was capped by lower volumes of civil engineering and commercial activity.

The balance of construction firms expecting an increase in business activity over the next 12 months fell to its weakest since December 2012 and employment numbers increased at one of the slowest rates seen over the past four years.

At 50.8 in October, the Construction Purchasing Managers’ Index was higher than the 48.1 level recorded in September, and back above the 50 mark which signals growth, but still well below the post-crisis trend of 54.7, according to IHS Markit.

“Greater housebuilding was the sole bright spot in an otherwise difficult month for the construction sector,” said Tim Moore, associate director at IHS Markit.

“Sustained declines in civil engineering and commercial activity meant that large areas of the building industry have become stuck in a rut,” he added.

Commercial building activity decreased for the fourth consecutive month in October, as a result of worries about the UK economic outlook.

IHS Markit said that civil engineering was the worst performing subcategory across the construction landscape, with some firms citing a lack of “bigticket infrastructure projects” to replace completed contracts.

“Housing continued to show the strongest foundations and is set to be the main driver of growth in the coming months but the prospect of softer consumer demand and rising costs will impact,” said Duncan Brock, director of customer relationships at the Chartered Institute of Procurement and Supply.

He added, however, that heavy reliance on residential building alone would be “foolhardy”, especially considering interest-rate rises on the horizon and the availability of skilled workers lacking in the sector.

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