Slight Upturn in Construction Activity but Sector Remains in Slowdown

Slight Upturn in Construction Activity but Sector Remains in Slowdown

Construction activity increased in May following a steep downturn in April, but the sector remains mired in a slowdown, new data reveals. 

Prime Minister Boris Johnson urged the construction industry to return to work last month as the government eased lockdown restrictions, but the sector remains in the worst downturn since 2009.

The findings from the UK Construction Total Activity Index, compiled by IHS Markit and the Chartered Institute of Procurement (CIPS), revealed May’s industry score was 28.9, up from 8.2 in April, but below the 50 mark which signals industry contraction. 

Construction companies that responded to the index survey reported a rapid drop in new orders received, which was largely attributable to the Covid-19 pandemic. Although respondents also stated that the reopening of construction sites had helped to limit the decline.

Tim Moore, economics director at IHS Markit, said: “A gradual restart of work on site helped to alleviate the downturn in total UK construction output during May, but the latest survey highlighted that ongoing business closures and disruptions across the supply chain held back the extent of recovery”.

Roughly 64% of those surveyed reported a drop in activity during May; only 21% reported an expansion. Those companies recording drops often cited furloughed staff and disruptions from social distancing measures on projects as reasons behind the drop. 

Moving Forward

When asked to elucidate on their prospects for 2020, optimism was little improved from April, indicating the construction sector is still battling for survival despite the gradual return to work.

“It seems likely that construction activity will rebound in the near-term, as adaptations to social distancing measures become more widespread and the staggered return to work takes effect. However, latest data pointed to another steep reduction in new orders received by UK construction companies, with the pace of decline exceeding the equivalent measures seen in the manufacturing and service sectors,” added Moore.

Survey respondents often commented on the cancellation of new projects and cited concerns that clients would scale back spending through the second half of 2020, especially in areas most exposed to a prolonged economic downturn.

“Since the start of the lockdown period in March, business sentiment has remained more downbeat than at any time since October 2008.”

Self Build Suppliers Reopen

Self build suppliers have begun to reopen showrooms amid lockdown restrictions easing, and self builders now have growing access to homebuilding resources.

(MORE: Self Build: The Ultimate Beginner’s Guide)

Many companies have been offering virtual consultations during lockdown to help customers plan their projects from the comfort of their home, and while construction will continue to face challenging times, the homebuilding industry is at least edging towards something resembling normality as lockdown eases.

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