The UK’s construction industry slumped into contraction last month for the first time since freezing weather and snow brought cranes to a halt a year ago, as Brexit uncertainty delayed new building projects.
After 10 months of expansion, construction companies said that activity levels fell during February, according to the latest survey from IHS Markit and the Chartered Institute of Procurement and Supply.
Reductions in commercial building and civil engineering projects triggered the drop last month, as Brexit uncertainty slowed decision-making and led to subdued demand.
The reading on the IHS Markit/Cips construction purchasing managers’ index (PMI), which is closely watched by the Bank of England and the Treasury for early signs of stress in the economy, dropped to 49.5 last month from 50.6 in January. The decline below the 50 mark that separates growth from contraction was the first since March last year, when the “beast from the east” caused cranes to fall idle across Britain.
David Cheetham, the chief market analyst at the financial trading firm XTB, said: “The fall last March was attributed to unseasonably late snowfall, but this time no such excuses can be rolled out.”
Barring the drop in activity triggered by the cold snap a year ago, analysts said that the monthly performance for the construction sector was the worst since September 2017.
Tim Moore, the economics associate director at IHS Markit, which compiles the survey of procurement managers from about 150 firms in the building trade across Britain, said: “The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects.
“Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space.”
Residential construction was the strongest area for the building industry last month, despite recording only a modest expansion in activity as dwindling confidence in the housing market acted as a brake on new building projects.
Some companies also noted that stockpiling by manufacturers had led to shortages of transport availability, leaving builders waiting for longer for products and materials.