Sharp drop in new work

There was a sustained decline in UK construction output during October, with overall volumes of work falling for the sixth consecutive month, according to the IHS Markit/CIPS UK Construction Total Activity Index.

The latest survey also revealed a sharp drop in new work, although the rate of contraction was the slowest for three months. Meanwhile, construction companies continued to reduce their workforce numbers in October, which was linked to weak order books and concerns about their near-term business outlook.

At 44.2 in October, the seasonally adjusted index registered below the crucial 50.0 no-change threshold. The latest reading was up from 43.3 during the previous month, but still close to the ten-year low seen in June (43.1).

Construction companies noted that client demand remained subdued in response to domestic political uncertainty and the economic backdrop. In some cases, survey respondents noted that unusually wet weather in October had acted as an additional headwind to construction output.

House building decreased at a faster rate in October. Latest data pointed to the greatest drop in residential work for over three years. At the same time, commercial construction fell for the tenth month running, but at the slowest rate since May.

Meanwhile, business optimism towards the year-ahead outlook for construction work remained among the weakest seen since 2012.

Chief executive of the Federation of Master Builders (FMB), Brian Berry said: “We know that many homeowners are holding off undertaking home improvement works due to Brexit uncertainty and this is having a knock-on effect of builders’ workloads. It is unclear how long clients will hold off waiting for certainty, and invest their money elsewhere”