For the first time in 13 months construction activity has fallen, sparking fears of a recession in the sector. This activity has gone from 51.1 in August and 51.9 in July, to 48.1 in September, according to the latest Markit/CIPS purchasing managers’ index.
According to Samuel Tombs, the Pantheon Macroeconomics chief UK economist, the figures suggest the sector is “heading for recession.”
This decline is lead by civil engineering and commercial building sectors, both of which have recorded sharp falls this year. Similarly, despite remaining in positive territory, the rate of growth for housebuilding dropped to a six-month low.
Brexit gets quite a large share of the blame for these lows, with the uncertainty it causes making clients much more hesitant and indecisive.
According to the Lloyds Bank managing director for construction, the situation isn’t as abysmal as it seems. Due to lower demand, there is less input buying than there has been for 6 months.
The survey tells us that business optimism has dropped to its second lowest level since April 2013, meaning firm’s expectations for the next year are decreasing with the activity level.