News - Construction News
Disappointing finish to 2018
The latest IHS Markit/CIPS UK Construction PMI® have been released showing a disappointing end to 2018, with business activity easing to a three-month low and new orders expanding at a relatively subdued pace.
Although the coming of the new year has brought a new found optimism to businesses, which finished the year on a high as respondents look towards 2019 with brighter prospects. The degree of confidence was the highest since last April and well above the near six-year low seen in October. Survey respondents cited hopes of a boost to growth from work on big-ticket transport and energy infrastructure projects in 2019.
Winter highlights were also seen with a rebound in civil engineering activity, which saw rates rise at the fastest pace since May 2017.
The Index posted at 52.8 in December, down from 53.4 in November, keeping activity above the crucial 50.0 no-change value for the ninth consecutive month. The modest rate of expansion that was the slowest seen since September.
Reports from respondents suggest that subdued demand affected December’s growth, and that unusually wet weather had slowed construction work.
Looking at categories, a huge slowdown in commercial and housing activity adversely affected the Index, with commercial building work the worst performing category.
Civil engineering continues to provide a bright spot for the sector, coming through as the strongest performing area of construction activity, with growth the fastest for just over one-and-a-half years. New business volumes have also grown for seven successive months, but the rate of expansion has eased since November and remains modest.
Political uncertainty over Brexit continues to add to industry pressures, with respondents citing delays over decisions, especially in relation to commercial development, due to Brexit.
There was good news on the employment front, with a solid rise in employment numbers across the construction sector in December. However, the rate of job creation eased from November’s near three-year peak. Some firms noted that efforts to reduce costs had led to the non-replacement of voluntary leavers at the end of the year. Sub-contractor usage meanwhile picked up, with the rate of expansion the strongest since December 2015.
There is some evidence that pressures on supply chains and materials is beginning to ease, with delivery times extending to their least marked extent for over two years.
IHS Markit Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey: “UK construction firms signalled a slowdown in housing and commercial activity growth during December, which more than offset a strong performance for civil engineering at the end of 2018.
“Subdued domestic economic conditions and an intense headwind from political uncertainty resulted in the weakest upturn in commercial work for seven months.
“Strong demand among first-time buyers meant that house building was the fastest growing category of construction output during 2018. However, construction companies indicated a renewed loss of momentum in December. Residential growth remains much softer than the two-and-a-half year peak achieved last summer.
“Civil engineering was the stand-out area of construction growth in December, with activity rising at the fastest pace since May 2017. Survey respondents also noted that the strengthening infrastructure pipeline is set to become a key engine of growth in 2019, despite concerns about possible delays to the delivery of major projects.
“An expected boost from transport and energy projects underpinned a rise in business optimism to an eight-month high in December. Construction sector confidence was also helped by softer input cost inflation and signs of a turnaround in supply chain difficulties from the low point seen last August. However, levels of optimism remained subdued in relation to those recorded by the survey over much of the past six years, largely reflecting concerns that Brexit uncertainty will continue to encourage delays with decision-making, especially on commercial projects.”
If you are interested in finding out more about key infrastructure trends today, you may wish to attend the flagship infrastructure exhibition at the NEC in April 2019 : UKIS 2019
Click here for more information on how to register or exhibit at the UK Infrastructure Show 2019.
If you would like to read more articles like this then please click here.
Related Articles
More News
- UK infrastructure companies visit Costa Rica to explore opportunities
8 Nov 24
Five British companies travelled to Costa Rica.
- £1 billion to retrofit social housing
7 Nov 24
National Wealth Fund, Barclays UK Corporate Bank and Lloyds Banking Group join forces to unleash
- Millions secured to get Britain building
6 Nov 24
Tens of thousands of new homes are set to be built across Britain funded by