Reaction to Markit/CIPS UK Construction PMI for May

The Vinden Partnership hopes that the effects felt across the construction industry caused by the uncertainty around the ‘Brexit’ vote are only short-term.

The Markit/CIPS UK construction PMI for May has been released and reveals a continued slowdown and a drop in new orders for the first time since April 2013.

The UK construction PMI figure for May dropped to 51.2, down from 52.0 in the previous month and is now only slightly above the growth threshold rate of 50.0.

Output growth is now at its weakest level for almost three years amid continued uncertainty ahead of the EU referendum.

Those hoping for a healthy pick up in pace in house building will be disappointed to see residential building work increased at one of its slowest rates since the start of 2013. Commercial activity was also at its slowest for almost three years.

The worst performing sector was civil engineering with growth stagnated during May.

Optimism within the construction industry continues to be quite high, however, with 51% predicting an increase in output over the next 12 months. Only 14% expected to see a decrease.

There was some good news for the industry with job creation in May hitting its highest level for four months.

Respondents to the survey were posed a special question relating to the impact of the EU referendum on the construction industry, with the results showing one in third businesses felt that the uncertainty surrounding the issue was having a negative impact. 5% said the impact was ‘strongly detrimental’.

55% reported no significant impact, while 9% of respondents were unsure whether ‘Brexit’ worries were a factor impacting on their business.

Peter Vinden, Managing Director of The Vinden Partnership – a leading multi-disciplinary consultant company to the built environment – said: “The inclusion of the special question about the impact of the EU referendum on construction businesses tells you all need to know.

“Let’s hope that the optimism within the industry is justified as we get a clearer economic picture after the vote later this month. The figures in the second half of the year will give us a better understanding of whether this stagnation is only a short-term problem.”

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