Home News Construction Activity Index confirms fastest downturn in output

IHS Markit/CIPS UK Construction Total Activity Index for March has revealed the fastest downturn in UK construction output for almost eleven years as emergency public health measures to halt the spread of coronavirus 2019 (COVID-19) led to stoppages of work on site and a slump in new orders.

The headline seasonally adjusted Activity Index dropped to 39.3 in March from 52.6 in February, to signal the steepest fall in construction output since April 2009. Survey respondents overwhelmingly attributed reduced activity to the impact of the coronavirus crisis.

All three broad categories of construction work recorded a fall in output during March. Civil engineering activity (index at 34.4) saw the steepest rate of decline, followed closely by commercial building work (index at 35.7).

Residential activity dropped at a comparatively modest pace in March, with the equivalent index posting 46.6. However, construction companies commented on an expected slump in house building from stoppages on site amid increasing measures to slow the spread of COVID-19.

New work received by construction companies fell at a sharp rate in March, with the downturn in order books the fastest recorded by the survey since August 2019. Survey respondents commented on a combination of weaker demand and concerns among clients about the feasibility of starting new projects during the COVID-19 outbreak.

Tim Moore, Economics Director at IHS Markit, which compiles the survey, said: “The closure of construction sites and lockdown measures will clearly have an even more severe impacton business activity in the coming months. Surveyrespondents widely commented on doubts about the feasibility of continuing with existing projects as well asstarting new work.

“Construction supply chains instead are set to largely focus on the provision of essential activities such as infrastructure maintenance, safety-critical remedial work and support for public services in the weeksahead.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply: “The battered construction sector was offered a brief respite in February with a marginal rise in output after a difficult year, but any hope of a continuation of growth was mercilessly bulldozed away in March and construction companies registered their lowest levels of optimism since October 2008.

“With no upturn in sight, and with the fastest level of layoffs since September 2010, the sector is stuck in quicksand and sinking further. Though lower commodity prices will bring some relief for those that can source a limited number of materials amidst disrupted supply chains.”

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