Residential likely to be hit by weakening consumer confidence, experts warn
Housebuilding activity proved to be the positive note last month across a construction sector struggling to deal with Brexit uncertainty, according to new data published this week.
The IHS Markit/CIPS UK Construction PMI reported that residential work in February was the best performing area of construction work, posting the 13th successive month of growth.
But expansion was said to be “far below” the peaks seen last year and could not offset declines reported in construction and civil engineering activity that were the steepest for a year.
And IHS/Markit warned that waning confidence in the housing market was beginning to hit housebuilding output as well.
A year on from last year’s “Beast from the East” the monthly-produced construction index dipped into contraction mode, dipping below the 50.0 “no change” level to 49.5.
But while bad weather was blamed for the downturn in February and March 2018, this year firms remain worried about the impact of Brexit.
Tim Moore, IHS Markit’s economics director, said companies had reported that “the more fragile housing confidence has begun to act as a brake on residential work, which adds to signs that housebuilding has lost momentum since the end of last year”.
And Duncan Brock, director of the Chartered Institute of Procurement & Supply, said consumers’ wariness would translate into a dip in housing activity in the coming months.
Smaller scale residential developers were being fuelled by lenders still keen to offer finance, according to Blane Perrotton, managing director of consultants Naismiths. “These developers have little choice but to keep building, even in the face of squeezed margins.
“By contrast the larger housebuilders, armed with deeper cash reserves, can afford to hold off in a bid to ride out the storm.”
But Perrotton warned that such “calculated inaction risks further choking off an industry which is fighting increasingly hard just to stand still”.
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