Purchasing Managers’ Index confirms construction output collapse during April
The latest IHS Markit/CIPS UK Construction Total Activity Index, that gathers information from purchasing managers, has confirmed the slump in construction output. The Index collapsed from 39.3 in March to 8.2 in April, to signal a rapid downturn in overall construction output.
Tim Moore, Economics Director at IHS Markit, which compiles the survey, said: “The rapid plunge in UK construction output during April stands out even in a month of record low PMI data for the manufacturing and service sectors. Looking ahead, construction companies widely commented on worries about cash flow, rising operating costs and severely reduced productivity, as well as a slump in demand for new construction projects.”
The Construction Products Association’s Economics Director, Noble Francis, responded to the news this morning saying: “Overall, our own analysis shows around 60% of construction output in Great Britain has been lost during the current social distancing restrictions, although this is 85% in Scotland where there is different guidance on what construction is allowed to occur.
“Even where activity is occurring, social distancing measures to ensure safety on site mean productivity has fallen 30-50% (depending on the development). This means construction activity takes longer and costs more, and so adversely impacts the margins of previously signed contracts.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “As new plans from policymakers are developed over social distancing, building work may continue but not as we know it as restrictions and new safety rules are likely to make progress more difficult. For a sector still not fully recovered from the skills shortages created by the financial crisis in 2008, the vacuum of output created by the pandemic has knocked the sector back another decade.”
Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented: “There is one ray of light – this could be as bad as it gets. Several of Britain’s biggest housebuilders are now reopening their construction sites, and many smaller players kept working throughout April, albeit following strict social distancing rules.
“Construction is a sector famed for its resilience in the face of economic volatility. It bears the scars of decades of boom and bust, and this past experience will stand it in good stead as it embarks on a painful recalibration to the post-Covid world.”
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