The January 2019 PMI data, published on February 4 revealed a fall from 52.8 in December to 50.6 in January, against the neutral reading of 50.0. January data pointed to a loss of momentum for the UK construction sector, with business activity growth grinding to its weakest for 10 months.
“The ongoing political uncertainty is partly to blame for this setback,” said Brian Berry chief executive of the FMB.
“Political uncertainty is the enemy of construction firms that rely on the spending power of homeowners to commission home improvement projects. The UK is set to leave the EU next month, and yet we are still none the wiser about what the future holds. Given these intense headwinds, it should not be surprising that the sector suffered such a sharp decline.
“Alongside the political uncertainty, the cost of doing business is also rising for construction firms up and down the country,” continued Mr Berry. “Material prices have been rising steadily since the depreciation of sterling following the EU referendum. Looking ahead, material prices are expected to continue to cause a headache for the construction industry with recent research from the FMB showing that 87% of builders believe that material prices will rise in the next six months.
“What’s more, the construction skills crisis means that key trades are extremely difficult to recruit and the upshot of this is rising wages in construction. This will only worsen if the post-Brexit immigration system that the government has planned goes ahead. If the sector isn’t able to draw upon crucial EU workers of all skill levels, who have so far served to mitigate this shortage, the slowdown of growth will continue.”
