Construction output growth ‘plummeting’

January’s PMI data pointed to a loss of momentum for the UK construction sector, with growth grinding to its weakest for 10 months.


Rising costs and uncertainty around Brexit are to blame for the sharp drop in output growth in January 2019, the Federation of Master Builders (FMB) has said in response to the latest PMI data.

The January 2019 PMI data revealed a fall from 52.8 in December to 50.6 in January, against the neutral reading of 50.0, slowing to its weakest for 10 months.

Further data revealed that commercial work remains the weakest performing area, as well as employment growth hitting a two-and-a-half-year low.

Commenting on the results, Brian Berry, Chief Executive of the FMB, said: “The ongoing political uncertainty is partly to blame for this set-back in output.

“Political uncertainty is the enemy of construction firms that rely on the spending power of homeowners to commission home improvement projects.

“Given these intense headwinds, it should not be surprising that the sector suffered such a sharp decline.”

Berry continued: “Alongside the political uncertainty, the cost of doing business is also rising for construction firms up and down the country.

“Looking ahead, material prices are expected 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.

“What’s more the construction skills crisis means that key trades are extremely difficult to recruit and the upshot of this is rising wages in construction.

“Tradespeople know they can command higher salaries than they did preciously as workers are scarce, and this means a squeeze in margins for firms.

“This will only worsen if the post-Brexit immigration system that the government has planned goes ahead.”

Similar stories by tag