Brexit uncertainty linked to worst month for construction in three years

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  • 06/06/2016
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Brexit uncertainty linked to worst month for construction in three years
The construction sector experienced another difficult month in May as new orders fell to their lowest point for three years.

A study by financial adviser Markit and the Chartered Institute of Procurement and Supply (CIPS) found that incoming new work declined for the first time since April 2013, with the index dropping from 52 in April to 51.2 in May. It was only slightly above what it calls the “critical” 50 mark, which means the market is growing, but slowly.

David Noble, group chief executive officer at the CIPS, said the sector “appeared to have taken residence in a waiting room of non-activity as continuing poor global economic conditions and uncertainty around the EU referendum impacted growth and new orders.”

The latest figures from the Office of Nationals Statistics also found that construction output fell recently, down 3.6% between February and March.

Tim Moore, senior economist at Markit and author of the index, said construction companies are facing a challenging second quarter of 2016.

“May data signalled the worst month for commercial building since June 2013, while residential work and civil engineering activity both saw a renewed loss of momentum,” he said.

However, there is confidence that the sector will bounce back, with more than half of the survey panel (51%) predicting a rise in output over the next 12 months and only one-in-seven (14%) expecting it to decline.

As a result, job creation picked up in May, reaching a four-month high.

On a further positive note, staff hiring was maintained in May, marking three years of continuous job creation and the fastest increase in payroll numbers since January.

Noble said recruitment levels were a “chink of light” creating optimism for the future in the industry.

“Once again, the industry holds it breath to see what the coming months will bring,” he said.

 

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