Industry reaction to PMI slump

With last week’s PMI data signalling sharp losses for the industry due to the Covid-19 outbreak, after a promising February, read the latest industry reaction to the news.

Following a positive February, the industry is stoic about the lastest figures and is ready to weather the current storm.

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented: “Bleak though it is, there are two modest silver linings to the construction industry’s PMI data.

“The first is that as an industry we’ve been here before. Few sectors have more bitter, regular experience of enduring sharp falls in confidence than construction.

“Battle scars in of themselves will provide no protection from a simultaneous drop in both demand and supply. But the fact that the declines seen during the 2008 financial crisis were worse offers some comfort. Construction weathered that storm successfully, and will do so again.

“Then there is the grey area about how far the UK’s lockdown rules apply to construction.

“With the Government allowing work to continue on ‘essential’ projects, the shutdown has not been total. There is plenty of debate about what constitutes ‘essential’ of course, but a proportion of building sites remain open, albeit with workers operating under strict restrictions.

“Housebuilders have kept surprisingly busy, with activity levels contracting rather than collapsing. Of course job losses have been painful, and as a sector with many self-employed contractors, construction will put the Government’s furlough scheme to a stern test.

“Yet overall this report could have been much worse. As an industry which typically requires large numbers of people to work together on-site, construction doesn’t easily lend itself to remote working.

“But with some sites remaining open and the industry accustomed to riding out extreme volatility, construction faces a grim time ahead – but it has at least got past experience to draw upon.”

While Kate Kirby, Construction & Infrastructure Partner at global legal business, DWF, comments: “The construction industry is naturally cyclical but the COVID-19 pandemic has taken it by surprise after things had started to improve over the recent months.

“For the near future, the market is likely to become more contentious. Contractors will be alive to putting a line in the sand in relation to potential extension of time claims. Employers and contractors may seek to terminate contracts with a view to re-pricing jobs when on the other side of this.

“They may also question whether the UK will need to look to a more localised supply chain for construction materials and workforce in the future.

“Currently it is very difficult to predict what the future will bring but there will hopefully be brighter times ahead.”

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