According to new statistics, the UK construction sector continued its downturn last month and saw the largest number of job cuts in four years.
In March, amid uncertainty about the UK economy and the global economy, the sector of commercial construction declined at its fastest rate since 2021.
S&P Global’s latest construction purchasing managers’ Index (PMI), published in March, showed a reading 46.4. This is an improvement from the 44.6 recorded in February.
Economists predicted a reading of 46,6. A reading above 50 indicates that the industry’s activity is growing, and anything below it means the industry is shrinking.
According to the figures, the UK construction industry shrank for a third month in a row in March. However, the decline was slower than it had been in February. The industry’s outlook was still bleak.
Tim Moore, director of economics at S&P Global Market Intelligence said that March data showed a difficult month for UK construction firms as the sharply reduced orders volumes continued to weigh down on overall workloads.
Civil engineering has experienced the largest setback since October 2020.
Survey respondents noted a lack of sales and infrastructure to replace projects that were completed.
Data showed that the commercial construction sector remained strong, but contracted even further. Its latest reading was its lowest monthly reading in more than four year.
The survey revealed that “lower business activity is linked to a lacklustre UK economy and the impact on client’s investment spending of increasing geopolitical uncertainties.”
The report states that rising payroll costs due to the National Minimum Wage and National Insurance Contributions will add to the average cost burdens. Input price inflation is also expected to accelerate to its highest rate since January 2023.
Construction order books have also been reduced due to a sluggish market.
The survey reported that staff numbers had decreased for the third consecutive month. At this point, the rate of job losses has reached its highest level since October 2020.
Moore said: “Construction firms remained cautious in their outlook for the year ahead, as lower sales conversions and a reduction of total new work for a third consecutive month hit confidence levels. The overall business optimism has dropped to its lowest level since October 2023.
In March, the lack of new construction projects and pressure on margins due to rising payroll costs led to hiring freezes, as well as the failure of employers in this sector, to replace departing employees. The construction industry lost the most jobs in the last four and a half years.
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