Construction sector grows but uncertainty remains

Ryan Fowler

November 9, 2018

Official figures released today have revealed that the UK construction industry has continued to grow over the last quarter despite uncertainty around Brexit. 

The IHS Markit/CIPS UK Construction Total Activity Index posted its second-highest level in 16 months at 53.2 in October, up from 52.1 in September.

However it was still some way below the long-run survey average of 54.3.

This was in part due to a slowdown in housebuilding across the UK which has put a drag on the construction industry.

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, said: “The construction industry is enjoying an Indian Summer.

“True, the surge in output in the third quarter is flattered by comparison with the grim decline of the first quarter and the plodding indifference of the second. But this is real, and welcome, progress.

“Housebuilding retains its crown as both poster child and ‘get out of jail’ card for the industry as a whole. Housebuilders delivered a half billion boost to the industry in the third quarter, but elsewhere the growth was patchy at best. Infrastructure work remains in positive territory but output is down, with contractors focusing on finishing existing projects rather than starting new ones.

“Among developers there is a widening confidence gap between the overheated South East and other areas where demand is stronger and margins better.

“Despite a marked improvement in the Brexit mood music this week, months of deadlocked negotiations have choked investor appetite. Unless and until the political limbo is ended, the industry will continue its holding pattern of two steps forward and one step back.”

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