Fears about Brexit and the economy have led to the lowest levels of business optimism in almost six years, according to a new report.
IHS Markit figures from the second half of October showed UK construction firms were the least optimistic regarding growth prospects in nearly six years, which respondents cited as due to the uncertainty of Brexit and the economy. Despite the slower rise in material orders, delivery times continued to lengthen and firms continued to report stock shortages at suppliers.
Cost pressures remained strong despite the rate of price inflation easing to a 27-month low. Firms said this was down to increased fuel, labour, timber and steel costs.
Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply, said: “On the surface, the construction sector showed growth but there was plenty for businesses to be concerned about underneath.
"These results point to the sector getting stuck in the mud as we approach March 2019, and with ongoing supplier delays and stock shortages, the sector may not be able to respond quickly enough anyway should there by a sudden upturn in fortunes.”
The report showed some positives: construction firms indicated an increase in activity, and there was the fastest growth in civil engineering since July 2017. However, new projects at construction companies slowed.
Housebuilding and commercial construction increased at solid rates, although it was the weakest in seven and five months respectively. The rate of new contract growth was the weakest in the current five-month sequence of expansion, which firms cited as down to tough competition in the market and delayed decisions from clients.
Read the full report here.