BREXIT uncertainty weighed on the UK construction sector as it recorded its first decline in output in 11 months in February, according to a key survey.
Commercial property construction activity fell and the civil engineering sub-sector also contracted last month, the survey published by the Chartered Institute of Procurement & Supply showed.
Although housebuilding activity rose for a 13th straight month, the rate of increase was only modest.
The construction total activity index fell from 50.6 in January to 49.5 last month on a seasonally adjusted basis, falling below the level of 50 deemed to separate expansion from contraction.
CIPS said: “Anecdotal evidence from survey respondents suggested that Brexituncertainty had slowed decision-making on commercial projects and led to subdued client demand so far this year. There were also reports that low transaction volumes and a general drop in confidence across the housing market had acted as a brake on residential buiding
UK construction firms’ overall confidence about the prospects for growth in activity on a 12-month time horizon dipped to its lowest for four months in February.
And the sector recorded only a marginal rise in new orders last month – with the survey signalling the weakest increase since May last year.
CIPS said: “Political uncertainty was widely cited as a factor contributing to a lack of invitations to tender, particularly on commercial projects.”
Job creation in the UK construction sector remained subdued in February, the survey showed.
Tim Moore, economics associate director at survey compiler IHS Markit, said: “The UK construction sector moved into decline during February as Brexit anxiety intensified, and clients opted to delay decision-making on building projects. Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space. The fall in commercial work hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.”
He said: “There were reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that housebuilding has lost momentum since the end of last year. This leaves the construction sector increasingly reliant on large-scale infrastructure projects for growth.”
CIPS director Duncan Brock said: “The recent fears over the Brexit-related impacts on the sector were realised this month.”
He noted that, barring the sector’s weather-related contraction last March, the drop in output in February represented the worst performance since September 2017.