Big freeze blamed for fastest drop in UK construction activity since 2016

Unseasonable snow has been blamed for a setback in UK construction activity last month following five months of marginal growth.

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI), a survey, fell sharply from 51.4 in February to 47.0 in March, to register below the 50.0 no-change threshold for the first time in six months.

The survey results signalled the fastest overall decline in construction output since July 2016, with respondents saying bad weather had disrupted both staff availability and activity on site.

But optimism levels and job creation both picked up in March, signifying that firms anticipate a rebound in activity soon.

"It’s a few years since the UK experienced such bad weather in March and it’s obvious that supply chains were woefully unprepared to deal with the disruption," said Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS).

"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."

Many small builders across the country were forced to close sites for more than a week and some employers reported that it was too cold to lay bricks, said Brian Berry, chief executive of trade body the Federation of Master Builders (FMB).

The overall reduction in construction output was driven by the sharpest drop in civil engineering work for five years in March.

Commercial activity also decreased during the latest survey period, with the rate of decline the most marked since September 2017.

Housing bucked the wider trend for construction activity in March, although the latest upturn in residential building was only marginal.

Construction companies indicated a decline in new business volumes during March, which continued the downward trend seen so far in 2018, but business activity expectations rose to a three-month high.

Additional staff hiring was attributed to forthcoming project starts and long-term business expansion plans.

At the same time, subcontractor availability continued to decline, which contributed to the strongest rise in their average prices charged since September 2017.

Materials costs continued to rise, but the overall rate of inflation slowed to a 20-month low. Some survey respondents cited a moderation in supplier price rises linked to the weak pound.

Meanwhile, construction firms indicated that supplier lead-times lengthened to the greatest degree since last July. This was attributed to a combination of stretched supply chain capacity, alongside transport delays following adverse weather in March.

Responding to the survey, the FMB’s Berry took a pessimistic view of industry prospects, which he said were overshadowed by Brexit.

"More broadly, the future is still looking incredibly uncertain for the UK construction sector," he said.

"We still don’t know what the post-Brexit immigration system will look like and given that businesses need to plan ahead, this could also be putting a brake on growth in the construction sector.

"This is especially the case for construction – our sector is heavily reliant on EU tradespeople with more than 8% of construction workers hailing from the EU. In London, this rises to one third.

"The Government must take stock of today’s results and redouble its efforts to provide post-Brexit clarity to businesses. We need to know what we can expect from the new immigration system – we need to know what will replace free movement of people."

Image: Snow gives motorists trouble in Reading, England on 1 March 2018 (Chris Wood/Wikimedia Commons)

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