UK construction lowest in four years

Having seen most of its major cities awash with construction cranes, it seems pace is beginning to slow, with the UK's construction sector recorded its weakest performance in four years between July and September.  Overall it seems levels have fallen by 1.1% according to the Office for National Statistics.

The same can be said about the other revenue generating elements of the construction industry. Repair work and maintenance declined by 3.6% compared with the second quarter of the year.  It seems that demand for these services has reached saturation, with many warning of oversupply damaging growth forecasts.  The strain of construction has produced record outputs from material suppliers, but they too may have to address pricing as demand declines.

Some of the major suppliers have begun to issue profit warnings, stating: "Following a slowing of activity around the time of the EU referendum, trading conditions in the UK have continued to soften and competition in the market has intensified."

The good news is these results are likely to have little effect on GDP, when forecasters estimating a fairly accurate 1.4% fall in construction activity.  If these figures can continue to be predicted successfully it allows the sector to make the necessary adjustments moving forward.  There is also reassurance from output remaining broadly flat in the last year, both before and after the recent referendum.

Many builders will find the delay to Article 50, which will allow the UK to leave the EU, hard to swallow.  With much doubt circling the industry it seems they will struggle to plan ahead with any real distance.  With suppliers from the EU affected by any deal post Brexit, builders will have to wait to factor in any kind of unforeseen costs.