UK construction sector continues to struggle

The UK construction sector, for so long the bulwark for steel demand in the UK, continues to struggle, according to the latest survey by IHS Markit/Chartered Institute of Purchasing and Supply, monitored by Kallanish.

Output fell in all three broad categories of construction, the survey for November reveals. There was a sharp drop in new work and staffing levels fell for the eighth month in a row.

The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index rose to 45.3 in November, from 44.2 in October, to signal the slowest drop in overall construction output for four months. Despite this, the sector is now passing through its most negative phase since the 2008-09 financial crisis.

All three broad areas of construction work recorded a fall in output during November, with civil engineering the worst-performing category, followed by steel-intensive commercial building.

The lack of UK political direction is a major cause of the current malaise. “UK construction output fell again in November as Brexit uncertainty and the forthcoming General Election continued to send a chill breeze across the sector,” says Tim Moore, economics associate director at IHS Markit.

“Greater spending on transportation and energy projects had been expected to help boost infrastructure work this year and next, but survey respondents indicated a sustained soft patch for overall civil engineering activity in November. Some construction companies reaffirmed their concern about the delivery of road and rail projects, with delays to contract awards acting as an additional headwind to growth projections for 2020,” Moore adds.