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Optimism Up as Construction Sector Contraction Slows

Sam • 6th Feb 2020
Optimism Up as Construction Sector Contraction Slows

Construction output has fallen at its slowest rate since May 2019, new PMI survey data has revealed.

Housebuilding fell at its slowest pace in eight months during January and the was the best-performing sector, followed by commercial, which saw its slowest decline since the beginning of 2019. Civil engineering was the worst-performing sector, with firms blaming the decrease on a lack of tender opportunities to replace completed projects.

A more politically certain situation following December's general election has led to business optimism reaching a 21-month high, with firms reporting a more willing investment picture from clients, the survey found.

IHS Markit economics association director Tim Moore said: “The construction sector downturn lost intensity in January amid slower reductions in housebuilding, commercial work and civil engineering activity. Measured overall, the latest dip in construction output was much shallower than in December, with survey respondents often commenting on improved willingness to spend among clients since the general election.”

KPMG UK head of infrastructure, building and construction Jan Crosby said: “The marginal shift in this month’s reading is symptomatic of a sector finally recovering from a turbulent political period.” He added that the UK is starting to see more interest from international investors as they anticipate an increased infrastructure spend.

Max Jones, from Lloyds Bank's commercial banking infrastructure and construction team, said: “Conversations on the ground suggest that a more stable political atmosphere is already providing cause for optimism.” He predicted that the approval of infrastructure projects in the Midlands and the North will boost optimism but said that the uncertainty surrounding the future of HS2 remains a concern for investors.

First Published: Construction News, 4th Feb 2020

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