{"id":595131,"date":"2023-01-07T12:49:27","date_gmt":"2023-01-07T18:49:27","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/01\/07\/steepest-decline-in-construction-activity-since-2020\/"},"modified":"2023-01-07T12:49:27","modified_gmt":"2023-01-07T18:49:27","slug":"steepest-decline-in-construction-activity-since-2020","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/01\/07\/steepest-decline-in-construction-activity-since-2020\/","title":{"rendered":"Steepest decline in construction activity since 2020"},"content":{"rendered":"
\n

December saw the fastest drop in UK construction activity since the early COVID-19 pandemic in spring 2020, according to the latest Purchase Managers\u2019 Index (PMI) data.<\/p>\n

It also found firms were running short on optimism for the year ahead, as they cut back on staff and purchasing amid weaker client demand.<\/p>\n

The PMI\u2019s headline figure was 48.8 in December, down from 50.4 the previous month. A figure over 50 represents a rise in activity, with anything below that level showing a drop.<\/p>\n

It is the first fall in the monthly index \u2013 compiled by S&P Global and the Chartered Institute of Procurement & Supply (CIPS) \u2013 since August last year, and the fastest contraction since May 2020.<\/p>\n

Civil engineering (46.8) saw a sixth consecutive monthly drop, while housing activity (48.0) fell for the first time since July. The contractions in these sectors outweighed a small increase in commercial construction activity (50.3).<\/p>\n

The index is compiled using data from a survey sent to a panel of 150 construction companies.<\/p>\n

This month\u2019s data highlighted a reduction in new orders placed with UK contractors, which respondents said was driven by weak client demand as a result of higher prices.<\/p>\n

The research also points to the first fall in employment since January 2021, with panellists saying that vacancies were often not being filled.<\/p>\n

Challenging business conditions meant that confidence among contractors for the year ahead was negative for the first time since the initial COVID-19 wave, although \u201cthe degree of pessimism was marginal\u201d.<\/p>\n

CIPS chief economist John Glen said: \u201cThe construction sector was stuck in the mud in December with the steepest fall in activity since the beginning of the pandemic in May 2020 and a similarly fast drop in pipelines of new work.\u201d<\/p>\n

He added that in the latest index, \u201coptimism remained very flat and at one of the starkest rates in the survey\u2019s history\u201d.<\/p>\n

\u201cBuilders are fast running out of the resilient spirit maintained over the last couple of years as the blocks to success piled up and the winter of discontent, with high inflation, strikes and shortages, continues,\u201d he said.<\/p>\n

Firms were holding back on recruitment, added Glen, \u201cunconvinced\u201d there will be enough growth in 2023 to justify additional expenditure amid squeezed margins.<\/p>\n

S&P Global Market Intelligence economist Lewis Cooper agreed that the data on declining staff levels \u201cshows that companies are preparing to face significant challenges in the months ahead\u201d.<\/p>\n

As highlighted by Construction News<\/em> at the time<\/a>, December also brought disruption for builders due to heavy snow and rail strikes.<\/p>\n

Beard Construction finance director Fraser Johns said that higher borrowing costs, tightening credit and wider inflationary pressures \u201chave had a major impact on client confidence\u201d.<\/p>\n

Highlighting how a tightening market was leading to more competitive tender processes, he commented: \u201cWhile those with strong balance sheets may be able to stomach that, those already at risk face a difficult 12 months ahead.\u201d<\/p>\n

Max Jones, director in Lloyds Bank\u2019s infrastructure and construction team, said that despite the challenges of the past year, the government\u2019s recommitment to publicly funded infrastructure projects has given contractors the confidence to invest into 2023.<\/p>\n

But he warned that if running costs continued to increase, \u201cthe industry\u2019s \u2018squeezed middle\u2019 could find itself bearing the brunt of price rises, without being able to move them along the supply chain\u201d.<\/p>\n

CN<\/em> revealed earlier today<\/a> that 23 construction firms entered administration in December, with most of them small or medium-sized enterprises.<\/p>\n

RSM UK partner Kelly Boorman said that challenging business conditions and slow pipelines suggested that new works and business confidence will continue to fall in the first quarter of 2023.<\/p>\n

\u201cThis bleak picture is likely to result in a ramp-up in administrations at the start of 2023,\u201d she said, as projects continue to be delayed and repriced due to supply chain fragilities.<\/p>\n

\u201cManaging cashflow and protecting those supply chains is a key focus for main contractors right now; to mitigate risk and ensure they have enough working capital for projects to be completed,\u201d she added.<\/p>\n<\/p><\/div>\n

Read More<\/a>
\n Jonathan Knott<\/p>\n","protected":false},"excerpt":{"rendered":"

December saw the fastest drop in UK construction activity since the early COVID-19 pandemic in spring 2020, according to the latest Purchase Managers\u2019 Index (PMI) data. It also found firms were running short on optimism for the year ahead, as they cut back on staff and purchasing amid weaker client demand. The PMI\u2019s headline figure<\/p>\n","protected":false},"author":1,"featured_media":595132,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27678,117739],"tags":[],"class_list":{"0":"post-595131","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-decline","8":"category-steepest"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/595131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=595131"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/595131\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/595132"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=595131"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=595131"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=595131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}