Brexit puts the brakes on British construction in January

Growth in the UK construction sector slowed significantly in January, with industry recording the weakest expansion since last March when it was hit by icy weather that put a freeze on companies operating in the space.

Ongoing uncertainty surrounding Brexit has taken its toll on the construction sector, with it applying substantial pressure on commercial building work, according to recent industry survey.

In fact, the IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) fell to 50.6 from 52.8 in December, falling well below economic forecasts.

Brexit helps freeze British construction

Growth in house building and civil engineering sectors have also slowed at an alarming rate, while overall activity in the commercial sector has contracted for the first time since March last year, where the industry was hurt by abnormally cold weather conditions.

‘UK construction growth shifted down a gear at the start of 2019, with weaker conditions signalled across all three main categories of activity,’ Economics Associate Director at IHS Markit Tim Moore said. ‘Commercial work declined for the first time in ten months as concerns about the domestic economic outlook continued to hold back activity.’

‘Delays to client decision making on new projects in response to Brexit uncertainty was cited as a key source of anxiety at the start of 2019,’ he added.

UK construction job growth slows ahead of Brexit deadline

British construction companies have also slowed the pace of new hires to a rate not seen since July 2016, shortly after the Brexit referendum, a sign that optimism about the industry’s future has turned to pessimism ahead of the UK’s departure from the EU with no deal in sight with less than two months’ until the March 29 deadline.

‘The sector suffered a sharp drop in output growth in January, and the softest rise in purchasing volumes since September 2017, as Brexit continues to hamper progress and dampen client confidence,’ Group Director at the Chartered Institute of Procurement and Supply Duncan Brock said.

‘The biggest shock came in the form of job creation which has managed to suffer the slings and arrows of Brexit highs and lows with solid hiring since the referendum result,’ Brock said.

‘Employment rose at the slowest rate since July 2016 and with optimism also in short supply, the sector only needs a small nudge to tip it closer to recession,’ he added.