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Construction output declines for sixth consecutive month

November 2019

According to the most recent IHS Markit/CIPS UK Construction Total Activity Index, construction output has continued to fall in October for the sixth consecutive month.  UK Construction Activity Index output figure of 44.2 for the month of October was dangerously close to the ten year low of 43.1, experienced in June, and well below the 50.0 no-change threshold.

Economists and industry figures have identified political uncertainty resulting in companies being unwilling to commit to investment in projects.

IHS Markit’s Tim Moore stated: “UK construction companies experienced a downturn in business performance during October as political uncertainty and subdued economic conditions again combined to hold back sales. New orders have fallen in each month since April, which is the most prolonged period of decline recorded for more than six years.”

“Civil engineering was the worst-performing area of activity in October, with business activity dropping at the fastest pace in ten years.  Construction companies also voiced concerns about the uncertain outlook for large-scale infrastructure projects upon which growth is expected to rest in the coming years.”

“House building has also lost momentum this autumn amid a broader slowdown in market conditions, with the latest survey data signalling the sharpest drop in residential work since June 2016.”

Duncan Brock, from the Chartered Institute of Procurement and Supply, added: “The construction sector’s distressing decline continued in October in spite of a small improvement in the headline index as a resolution to the political impasse seemed close.”

“Jobs hiring suffered as businesses unsure of the Government’s next steps held back on their development plans, which were weakened further by stronger competition for fewer opportunities.”

“To say these figures are disappointing is a big understatement. Given that the next political hurdle is December’s General Election, all eyes will be on the new administration and clear direction, because at the moment there is little insight into what could possibly pull the sector out of its ditch.”

More at: https://ihsmarkit.com/index.html

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