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UK construction activity falls for first time in 11 months

UK construction activity declined in February for the first time in eleven months led by a drop in commercial building work.

Civil engineering work also fell but residential construction continued to grow for the 13th consecutive month, according to the IHS Markit / CIPS Construction purchasing managers’ index (PMI).

The survey of businesses also found that a soft patch of new orders had also led to subdued job creation last month.

IHS Markit said firms had cited Brexit uncertainty for the slowed decision-making and subdued client demand as PMI fell below the no-change threshold of 50 to 49.5.

Low transaction volumes and a general drop in confidence across the housing market had also halted residential building, the survey revealed.

“The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects,” IHS Markit economics associate director Tim Moore said.

“There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year.”

UK head of construction at KPMG Jonathan White said: “Construction firms have their heads down in contingency planning for every outcome, but what this means for the long-term health of the sector is uncertain.

“It seems as though many businesses are in defensive mode and do not have the confidence or clarity to make future plans.”

BLP Insurance director Phil Harris said the long-term viability of Help to Buy was also a concern for the construction sector.

He said the success of Persimmon and a subsequent government review into the scheme could accelerate the collapse of Help to Buy.

“The scheme has been propping up the residential sector and keeping prices artificially high in an otherwise stagnating market.

“Its collapse could leave thousands of first time buyers in negative equity, with the aftershock having the potential to severely impact on the wider industry – blowing the government’s optimistic housebuilding targets out of the water in the process.”

Source: City AM