Construction growth slows amidst Brexit uncertainty

The UK construction sector hit a three-month low in December, amidst falling demand for commercial projects and the growing risk of a no-deal Brexit.

The IHS Markit/Chartered Institute of Purchasing & Supply activity index dropped from November’s 53.4 to 52.8, still above the 50-mark separating growth from contraction, but beneath economists’ expectations of 52.9.

Commercial building was the worst performing category, with activity expanding at the slowest rate since last May. The strongest performing area of construction activity at the end of 2018 came from work on civil engineering projects, growing at the fastest pace for just over one and a half years.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, comments: “With a slight rise in new orders and a softening in overall activity growth, firms continued to be impacted by Brexit-related uncertainty and reluctance by clients to place orders especially for commercial projects.

“The saviours of the sector were residential building expanding for the 11th month in a row and civil engineering work rising at the fastest pace since May 2017, but additional underlying pressures were still in evidence. Continued price increases for raw materials remained a challenge, but suppliers at least were able to deliver their best performance since September 2016 in spite of extra demand as a result of stockpiling.

“Through all this, construction firms remained resilient as optimism for the future rose to an eight-month high. This muted end to the year could not dampen hope completely as construction kept its head just above water waiting for political resolutions to the Brexit crisis and a clear path ahead.”

At Beavis Morgan, we work with a number of construction businesses, helping them with strategic planning, business turnaround and improving business performance for the future.

Through our partner businesses, BM Structured Finance and BM Advisory, we are able to help with sourcing and restructuring debt finance for SME businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.

For further information about how we can help you and your business, contact Steve Govey or your usual Beavis Morgan Partner.

Further reading:

Building and Construction Services – VAT Note

SMEs must plan ahead for supply chain disruption