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UK Construction Sees Weakest Upturn In Output For A Year
It’s not great news for construction companies making use of scaffolding companies in the UK at the moment – the latest IHS Markit/CIPS UK Construction PMI has just revealed that the sector is still experiencing a slowdown right now, with the weakest overall construction performance recorded since August last year.
Survey data taken from August shows that the main source of weakness was reduced levels of commercial work, offsetting the growth seen in residential building. New business volumes were also seen to drop for the second month in a row, which those questioned put down to growing economic uncertainty and reduced business investment.
Survey respondents also noted that the lack of new orders coming in to replace those completed projects is a key reason for this slowdown. Civil engineering activity was found to be close to stagnation, while commercial work fell at the fastest pace since July last year. Total new order volumes fell for the second consecutive month, although August’s rate of contraction was slower than that seen in July and was only marginal as well.
Commenting on the findings, director of customer relationships at the Chartered Institute of Procurement & Supply (CIPS) Duncan Brock said: “The sector hit a roadblock this month as purchasing activity slowed for the third month and new business wins were hard to come by. Reduced government spending, economic uncertainty and Brexit-delayed decision-making among clients were largely to blame.
“The struggling commercial sector drove this disappointment, languishing under the pressure with the fastest drop in activity in over a year. Job creation was nothing to shout about and showed signs of a slowdown, as companies reined back additional spending.”
Associate director at IHS Markit Tim Moore went on to add that there are signs that construction companies across the UK are readying themselves for this trend to continue into the autumn, with “fragile business confidence” helping to contribute to weaker trends for input buying and job creation during August.
The worry for analysts now is that this slowdown in growth could see the sector facing a possible recession. Chief UK economist with Pantheon Macroeconomics consultancy Samuel Tombs told the Guardian that if Brexit talks carry on progressing slowly, more companies will put contingency plans in place, which will see office space become more available and demand fall for new commercial projects.
And the recently leaked Home Office paper suggests that it could become a lot worse for construction companies in the future. The document – leaked to the Guardian – stated that the free movement of labour would end immediately after Brexit, with restrictions brought in so that only the highest skilled workers from the EU would be able to come into the country for jobs.
Right to work checks are also set to be introduced, which would need to be carried out by employers. Criminal sanctions could also be imposed against companies and individuals caught flouting the system.