Beast from the East causes biggest drop in construction activity since Brexit vote
Thanks to the severe weather faced in the UK in March of this year, the UK construction industry saw a huge drop in activity. This is the biggest drop since the Brexit vote in late June 2016.
Civil engineering also saw their biggest drop in activity in five years because of the Beast from the East. However, housebuilding fared slightly better than its industry counterparts.
March data for the construction industry revealed a setback following five months of business activity growth. A rebound is expected, however snow-related disruption having a negative impact on projects caused this drop in output, said the Purchasing Managers’ Index.
The IHS Markit/CIPS UK Construction Purchasing Managers’ Index fell sharply from 51.4 in February to 47.0 in March. It registered below the 50.0 no-change threshold for the first time since October 2017, as well as seeing the fastest decline since the Brexit vote. Overall, the “sharpest drop in civil engineering work since for five years” drove the reduction in construction output.
However, it’s not all bad news for the industry. The Office For National Statistics estimates that construction grew by around 5.7% in 2017. The sector accounts for approximately 6% of GDP.
What the experts had to say
Tim Moore, Associate Director at IHS Markit, said, “The construction sector continued to experience subdued business conditions during March. Survey respondents reported snow-related disruption as the key factor behind the marked decline in activity on-site.
“Construction activity will strengthen over the near-term.”
Tim Moore
“A solid rise in employment numbers and the rebound in business expectations to a nine-month high provide an indication that construction activity will strengthen over the near-term. However, survey respondents noted that underlying demand remains constrained by heightened economic uncertainty and risk aversion among clients.”
Duncan Brook, Group Director at the Charted Institute of Procurement & Supply, said: “Civil engineering and commercial activity were the most affected. Housing become the best performer. However, the marginal improvement in residential building was softer than in most of 2017 indicating there may be something more serious ailing the sector, as respondents also cited continuing Brexit-related uncertainty and disappointment over the performance of the UK economy.
“There was some good news as purchasing levels increased slightly. [These were] sustained by the respite of pressure from cost increases which were the lowest since June 2016 and where the worst impact of the weak pound on prices may have dissipated. With the strongest job creation this tear, firms has a more hopeful outlook for the coming months coupled with the highest level of optimism since June 2017, as they scoured the wider marketplace for opportunities.
“March’s figures could be a temporary blip.”
Duncan Brook
“It’s a few years since the UK experienced such bad weather in March. It’s obvious that supply chains were woefully unprepared to deal with the disruption. So though March’s figures could be viewed as a temporary blip, without a strong pipeline of work, and strong risk strategies in place, the sector’s health remains in question as we’re still a long way off seeing it operate the way it has over the last year.”
Did the Beast From The East hinder your work at all? Were you able to get to work or did you get stranded? Let us know in the comments. Or, drop us an email with your thoughts!
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