Britain’s Uncertain EU Future Negatively Affecting Construction

Britain's uncertain EU future negatively affecting construction

Uncertainty over Britain’s future in the European is having a negative impact on new orders in the construction industry.

Output growth has fallen to its weakest rate in nearly three years, while the PMI fell to 51.2 last month, a fall from April’s 52.0 figure.

This data has left activity in the construction sector only just above the 50.0 level of ‘no change’.

May saw a slow down for all three sectors, as residential work grew at one of the weakest rates in three years and commercial activity growth slowed to its weakest level in three years.

For the second month in a row, civil engineering was the worst performing sector as it once again stagnated last month.

The data from May also highlighted the first drop in the volume of new orders for the first time in over three years, with data respondents pointing to an absence of client confidence as the main reason for this.

The lack of confidence is thought to have been brought on by project delays and economic uncertainty caused by the forthcoming EU referendum.

The research showed that a third of businesses have reported a negative impact on their activity because of the economic uncertainty that has come with the EU vote.

On the other hand, the survey also showed that 55% of construction companies reported no significant effects on their business caused by the referendum.

Furthermore, only 16% of companies said that the EU referendum was having an adverse effect on costs, but 26% of organisations believe they have seen a negative impact on their profits.

In spite of a fall in activity and lingering economic uncertainty, the majority of firms are remaining positive about the prospects for the construction industry.

More than half of those who responded to the survey expect to see an output increase in the next 12 month period, with just 17% anticipating a fall in activity.

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