Construction sector avoids a new technical recession

Building Projects in United Kingdom

Construction activity in the United Kingdom emerged from a technical recession when it unexpectedly grew a little last month, but confidence among firms in the sector dropped to the lowest level in nearly five years.

The construction sector has struggled due to a decline in commercial office building last year and many infrastructure projects have ended. House building has been helped by the government’s scheme called help-to-buy equity loan programme.

Tim Moore, associate director at IHS Markit, attributed the rise to the house building sector.
“Greater house building was the sole bright spot in an otherwise difficult month for the construction sector,” he said.
Sustained declines in civil engineering and commercial activity meant that large areas of the building industry have become stuck in a rut.

Reduced tender opportunities and fragile demand are placing a dark cloud over the near-term outlook. October survey data indicated that UK construction companies are now the least confident about their forthcoming workloads since December 2012. Staff recruitment has also begun to tail off as construction companies head into the winter with heightened concern over demand conditions.

Activity in the sector fell with the purchasing managers’ index (PMI) score dropping to 48.1 in September, below the 50 level that indicates growth

Construction output fell last month reaching the lowest level since July 2016 when most builders feared that the Brexit vote would negatively affect their orders.

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