Britain’s
construction industry seized up due to heavy snow last month, prompting the
biggest drop in activity since just after 2016’s Brexit vote, the latest
industry survey shows.
The IHS Markit/CIPS
UK Construction Purchasing Managers’ Index (PMI) slumped to 47.0 from 51.4 in
February.
House building was
little affected, but the storm clobbered other sectors, the survey showed.
Civil engineering
firms suffered their biggest downturn in five years. The survey’s index for
commercial work, which had recovered in January and February, staged its
biggest one-month drop since 2009.
Official data show
construction output declined throughout the last three quarters of 2017, with
respondents in the PMI survey repeatedly citing Britain’s vote to leave the
European Union as weighing on new business.
Brian Berry, Chief Executive of the FMB, said: “The latest PMI data shows the fastest drop
in construction activity since July 2016. The unusually cold and snowy weather
experienced across the UK last month is partly to blame for this set-back.
"The cold snap
impacted on a broad array of construction projects, including house building,
domestic refurbishment and large civil engineering projects. Many small
builders across the country were forced to close sites for more than a week and
some employers reported that it was too cold to lay bricks.
“Alongside the snow,
the cost of doing business is rising for the UK’s construction firms. Wages and
salaries are all rocketing because of the ever worsening skills shortages in
construction. What’s more, material prices have been rising steadily since the
depreciation of sterling following the EU referendum. Increased prices for
metals and insulation in particular were noted in March. We expect material
prices to continue to cause a headache for the construction industry with
recent research from the FMB showing that 87% of builders believe that material
prices will rise in the next six months.
"More broadly,
the future is still looking incredibly uncertain for the UK construction
sector. We still don’t know what the post-Brexit immigration system will look
like and given that businesses need to plan ahead, this could also be putting a
brake on growth in the construction sector. This is especially the case for
construction – our sector is heavily reliant on EU tradespeople with more than
8% of construction workers hailing from the EU.
"In London, this
rises to one third. The Government must take stock of today’s results and
redouble its efforts to provide post-Brexit clarity to businesses. We need to
know what we can expect from the new immigration system – we need to know what
will replace free movement of people.”
Mark
Robinson, Scape Group Chief
Executive, described March's weather as a hammer blow to the industry but also
noted some positive points from the survey.
"A
rise in employment figures and a more positive stance on business activity
expectations illustrates that confidence in the sector is growing," he
added. "As well as this, residential building activity increased in March,
albeit only marginally. While the usual concerns over economic uncertainty
remained in March, it is encouraging to see a renewed level of optimism in the
sector.
“Unfortunately,
the impact of the weather demonstrates the fragility of the construction
sector. While we cannot control mother nature, we should at least be in a
position to ensure that there is a solid line of current and future work in
place and that contingency plans are available to deal with meteorological
events that could become more frequent occurrences in our changing climate.”
