Building blues as construction sector dips into contraction during February

● Latest PMI slips below 50 mark for the first time since Beast from the East

Britain’s construction sector tipped into contraction territory last month as Brexit concerns continued to weigh on firms as they delayed undertaking new building work.

The closely monitored IHS Markit/cips construction purchasing managers’ index (PMI) – released yesterday – fell to 49.5 in February from 50.6 a month earlier. Any figure below 50 denotes contraction while the latest reading was also shy of economists’ expectations.

It marks the first time that the construction PMI has registered below the 50 threshold since the weather disruption caused by the Beast from the East in March last year.

Last month, construction firms saw a steep contraction in commercial building activity and civil engineering.

Howard Archer, chief eco- nomic advisor to the EY Item Club think-tank, said: “Definitely not a survey to build first-quarter growth hopes on – the purchasing managers’ survey points to the construction sector contracting in February after marginal growth in January.

“Excluding the weatherrelated slump in construction activity in March 2018, this was the weakest construction PMI reading since September 2017.

“Furthermore, the weakness in construction activity was widespread in February with commercial and civil engineering activity both contracting at the fastest rate since March 2016 with house building expanding at a slower rate. Interestingly, the construction survey contained further evidence of stock-piling by UK manufacturers as it was reported that construction companies’ delivery times had lengthened.”

Archer added: “The manufacturing and construction PMIS point to the UK economy experiencing a tough first quarter amid heightened Brexit uncertainties and a weaker global economy.

“The PMIS suggest that there could be a downside risk to our already weak expectation that GDP [gross domestic product] growth will be limited to 0.2 per cent quarter-on-quarter in the first quarter. Much depends on how the dominant services sector is performing.”

Mark Dyason, managing director of Thistle Finance, said: “It’s not a huge surprise that the headline number dipped below the symbolic 50 mark in February. Brexit is hanging over the UK construction sector like the Sword of Damocles.

“The current climate is not for the fainthearted but for experienced and financially strong developers there are opportunities aplenty and no shortage of finance options,” he added.