Construction output suffers steepest decline since 2009

The UK construction sector experienced its ‘worst month in a decade’, with the IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) slumping to 43.1 in June, down from 48.6 in May. This is far below the 50 level that indicates no change from the previous month.

The fall in house building was the largest reported for three years, while commercial work fell for the sixth consecutive month and civil engineering declined at the fastest pace since October 2009.

Political instability and concerns over the economy are blamed for the fall in activity, causing delays to new projects and longer wait times for infrastructure contract awards.

“While the purchasing managers’ surveys can sometimes overstate economic developments at particularly good or bad times, it is hard to find anything of comfort in this release,” an industry spokesperson said.

Duncan Brock, Group Director at CIPS, said: “Purchasing activity and new orders dropped like a stone in June as the UK construction sector experienced its worst month for a decade.

“This abrupt change in the sector’s ability to ride the highs and lows of political uncertainty shows the impact has finally taken its toll as new orders dried up and larger contracts were delayed again.

“The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years, which is frankly worrying news.”

Tim Moore, Associate Director at IHS Markit, said: “Greater risk aversion has now spread to the residential building sub-sector, as concerns about the near-term demand outlook contributed to a reduction in housing activity for the first time in 17 months.”

At Beavis Morgan, we work with a number of clients in the construction industry sector, 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.