UK construction faces 10-year low as PM Boris Johnson pursues Brexit

CIPS boss says moderate supply chain improvements 'will not be enough to keep the wolf from the door as no-deal looms'

UK PM Boris Johnson.
Arabian Business / Archives
UK PM Boris Johnson.

The UK construction sector’s activity – hit by uncertainty around Brexit and its impact on investment – continued to shrink at its second-fastest pace since April 2009, scoring 43.3 points in September 2019 compared to 45 points in August 2019 on the Purchasing Managers’ Index (PMI) report released by IHS Markit and Chartered Institute of Procurement & Supply (CIPS) UK, which was released as UK Prime Minister Boris Johnson reiterated on 2 October 2019 the Conservative Party’s commitment to withdrawing from the EU with or without a Brexit deal on 31 October 2019.

Any result lower than 50 indicates that construction activity is contracting rather than expanding, and for the PMI report, respondents attributed the marked slowdown to Brexit uncertainty and the resulting hesitancy caused among clients, as well as a general underlying weakness in demand.

Even a moderation in input prices since March 2019 and some moderate improvement in supply chain pressures will not be enough to keep the wolf from the door as no-deal looms and businesses remain Brexit unsteady.

The report also indicated cost-cutting efforts are under way in the UK, with job reductions being noted for the sixth time in as many months. 

Commenting on the findings, group director at CIPS, Duncan Brock, said: “The construction sector offered another devastating result in September with the second fastest fall in new orders since March 2009 and the financial crisis. After a relentless six-month decline in order books driven by Brexit uncertainty and political indecision, this is hardly surprising.

“Looking ahead, the signs do not look positive. Even a moderation in input prices since March 2019 and some moderate improvement in supply chain pressures will not be enough to keep the wolf from the door as no-deal looms and businesses remain unsteady.”

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