Sure signs that Brexit has affected the construction industry arrived today with the release of the latest Markit/CIPS UK Construction PMI index.
Figures for June showed the UK’s construction industry experienced its weakest performance since the financial crisis. Activity in the sector shrunk to 46.0, down massively from 51.2 in May, and into contraction for the first time in more than three years.
Speaking about the results, Professor Noble Francis, economics director at the Construction Products Association, told Construction Manager: “Private housing and commercial property felt a particular slowdown in activity. What we have to look at where it may have an impact, is on the signing of new contracts for contractors.
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“In the short-term people will get on with what’s already out there and many contractors, of course, have order books for the next 12 months. The problem is in the medium term and beyond that, uncertainty means they are concerned about new contract awards and what comes going forward.
Markit/CIPS UK construction PMI
He added that while private house building continues, there is also evidence that this same uncertainty has had an impact on new housing starts.
Mark Robinson, chief executive of Scape Group, conceded that the news and continuing uncertainty had already impacted residential construction, which is a blow to much-needed government plans to step up house building. However, in the long term he remained positive.
“I count myself among those that believe there is light at the end of the tunnel and the construction industry will continue on its upward trajectory once the uncertainty clears,” said Robinson. “The government is still determined to push through flagship policies with George Osborne commenting that the HS2 rail project and trans-Pennine rail improvement should continue to be pushed ahead by the next prime minister.”
Brian Berry, chief executive of the FMB, said: “June’s PMI figures, which show a huge dip in construction output, reflect our fears that uncertainty over the outcome of the EU referendum would hit our sector. In the wake of the UK’s vote to leave the EU, there is a growing concern that this period of uncertainty is only just beginning.
“Construction is an industry that is particularly vulnerable to dips in confidence and it appears that many clients were hesitant to commit to new projects as they were unsure of what the future held. An exit road map is needed to show what steps are going to be taken to withdraw from the EU.”
