Construction is upbeat for 2020
GREATER clarity over Brexit has boosted confidence in the construction industry for the year ahead.
Following the Tory election victory optimism is at a nine-month high, says the snapshot IHS Markit/CIPS purchasing managers survey.
But experts say it will take several months for the sector to benefit given time lags for building projects.
However, the survey also found the sector has suffered its worst downturn for nearly a decade as companies delayed projects because of political uncertainty in 2019.
Construction showed a sharp drop in new business volumes last month.
Activity across the sector, about 6 per cent of overall economic output, fell for the eighth straight month in December.
Civil engineering showed the biggest weakness, with its poorest performance since March 2009.There was also a sharp drop in commercial work and house building fell for its seventh month.
Tim Moore, economics associate director at IHS Markit, said: “Brexit uncertainty and spending delays ahead of the general election were once again the most commonly cited factors highlighted by firms experiencing a drop in construction activity.”
Duncan Brock, of the Chartered Institute of Procurement & Supply, noted a “spike in confidence” among construction firms hopeful the “political deadlock would shortly come to an end”.
But he warned: “Construction companies are still struggling to fill the skills gap left by the last recession. It may take years to salvage the losses of the last three years, even if all obstacles are magically removed from the sector’s path to recovery.”
Samuel Tombs, UK economist at Pantheon Macroeconomics, said: “It will take at least a few months before the construction sector starts to benefit from the reduction in political uncertainty, given long time lags between commissioning projects and work beginning on the ground.
“Nonetheless, the Conservatives’ election victory means that firms solely focused on the domestic market likely will start to invest again, now that the threat posed by a Labour government has been extinguished.”