UK Construction Sector Slows In August

Burflex House, Clay Street, Hull, East Yorkshire, HU8 8HA E.

Burflex House, Clay Street, Hull, East Yorkshire, HU8 8HA E.

UK Construction Sector Slows In August

UK Construction Sector Slows In August

Activity in the UK’s construction sector slowed down in August, according to the latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI).

The PMI recorded 52.9 in August, above the 50.0 no-change mark, but below the high of 55.8 recorded in July. Although there was still a moderate increase in construction output, the organisations behind the index pointed out that this was the weakest rate of expansion experienced since May.

Commercial building was named as the best performing area this month, with residential projects following behind. However, the PMI noted that this was the weakest expansion in housing activity in the UK since March.

Work on civil engineering projects fell in August for the first time in five months too. Among those who completed the survey, there was a sense that Brexit-related uncertainty is holding back investment and resulting in a slowdown in new business growth.

Other concerns among those working in the construction sector are tight labour market conditions and a skills shortage, which means it’s difficult to fill some vacancies in the industry.

Despite these worries, UK construction firms are still optimistic that business will expand in the coming 12 months, which could mean more work for scaffolders in Lincoln and other cities around the country.

Tim Moore, associate director at IHS Market and author of the Construction PMI, said that despite the slowdown, there are some positives to take from the latest survey.

“There are some encouraging takeaways from the latest survey, especially the resilient degree of new business growth in August and a strong upturn in staff recruitment,” he asserted.

However, group director at the Chartered Institute of Procurement & Supply (CIPS) Duncan Brock stressed that there’s still work to be done to boost the country’s construction sector and ensure it continues to grow.

He said that more concrete progress needs to be made in the Brexit negotiations to give businesses more certainty about the outcome, otherwise work levels and optimism within construction will begin to suffer.

Despite the slowdown in house building recorded in August, there has been other good news for the sector.

A new report by the Home Builders Federation (HBF) has branded the government’s Help to Buy scheme “an unmitigated success”.

The organisation found that 170,000 households had used Help to Buy, with 81 per cent of these being first-time buyers. What’s more, housing supply has increased by 74 per cent since the scheme was introduced and this is supporting 150,000 new jobs.

Stewart Baseley, executive chairman of the HBF, commented: “Housebuilders continue to invest in the land, materials and people need to deliver further increases in supply confident in the demand Help to Buy is underpinning.”

The HBF has stressed the importance of Help to Buy in boosting demand for new homes, and is hoping that the government will decide to extend the scheme when it discusses its future later this year.

According to the organisation, it has been especially beneficial for the new-build sector, with new builds now accounting for nearly 15 per cent of all mortgaged housing transactions, well above the long-term average of 8.2 per cent.