Construction industry slows down amid worrying political and business backdrop – following the announcement of the Construction PMI figures, Phil Harris, Director at BLP Insurance comments on the sector:
“The construction sector suffered its second monthly fall in a row down to 50.6, but scrapped in just above the growth threshold of 50.0 which was an achievement in itself given the festive seasonal slowdown and the gloomy political and business backdrop.
“With two months left until the UK leaves the EU and no clear deal in sight, confidence in the construction sector on several levels is in short supply.
“Small residential building contractors, the lifeblood of the sector which has skin in the game on a personal level, are minding their costs carefully and are not committing to building new units until they are certain that they have sold the properties they have already finished.
“Without ‘Help to Buy’ and ‘Shared Ownership’, the residential sector would have undoubtedly dropped under the growth threshold. These finance schemes, whilst providing life support for the residential market and keeping prices fairly buoyant, are in turn exacerbating the long-standing affordability problems for consumers.
“With profit margins under continuing pressure, the financial wobbles at Interserve and Kier have added to the lack of confidence within contracting and has contributed to a number of new commercial projects being put on hold. Credit insurers tightening the thumbscrews on sub-contractors and suppliers have added to this toxic mix to erode confidence further.”