The construction sector declines for the sixth month in a row

The construction sector continued to face political and economic uncertainty in the UK as the latest data showed it was in recession.

There was slight improvement in October compared to September, according to the closely watched IHS Markit/CIPS Construction Purchasing Managers’ Index (PMI), but significant concerns remain.

PMIs were 44.2 in October and anything below 50 is seen as a decline, marking six consecutive months of decline for the sector.

Data is collected through interviews with purchasing managers to gauge sentiment and gain real-time information on the state of the industry.

The survey also found that construction companies continued to cut jobs in October due to weak order books and managers’ concerns about near-term business prospects.

October’s figure was up slightly from September’s figure of 43.3, but is still close to the 10-year low recorded in June of 43.1.

The worst performer was the civil engineering industry, where economic activity declined at the fastest rate since October 2009.

Housing construction also fell at a faster pace last month, with the residential sector seeing its biggest decline in three years. Commercial construction also declined for the tenth month in a row, but the rate of decline has slowed, researchers added.

The data shows that companies say customers are continuing to put off making big spending decisions due to political uncertainty over Brexit, and the lack of work has also kept costs down, resulting in more widespread discounts.

Tim Moore, deputy director of economics at IHS Markit, which produces the survey, said: “There are clear signs that construction companies are preparing to extend the soft patch for project starts, underscored by a further decline in purchasing volumes and another month of cuts to staffing through not replacing people who voluntarily leave.”

Business optimism for the coming year also remains at its lowest level since 2012, although there was hope that large-scale civil engineering projects could improve the sector.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “To say these figures are disappointing is a gross understatement.

“With the next political hurdle being the December general election, all eyes will be on the new administration and clear direction as little is known at the moment about what could pull the sector out of the ditch.”

Tuesday brings the latest PMIs for the key services sector, which accounts for four-fifths of the UK economy, following September’s reading of 49.5.

On Friday, the manufacturing sector recorded a score of 49.6 for October, an improvement on the score of 48.3 in September – although this is mainly due to stockpiling ahead of the now-delayed Brexit day of October 31.