Business

UK construction output contracts as CEF urges MPs to reverse cuts in Northern Ireland’s capital expenditure

OUTPUT in the UK's construction sector contracted in February to its lowest level in almost a year as Brexit anxiety continued to weigh on firms as they delayed making decisions on building projects.

The IHS Markit/CIPS UK Construction purchasing managers' index (PMI) fell to 49.5 in February from 50.6 the previous month. This missed economists' expectations of 50.5. A reading below 50 indicates contraction.

February's construction PMI registered below the 50 threshold for the first time since the weather disruption caused by the Beast from the East in March 2018.

Last month, construction firms saw a steep contraction in commercial building activity and civil engineering.

IHS Markit said uncertainty related to the UK's impending departure from the European Union slowed decision-making on commercial projects, which led to subdued demand, while a general drop in confidence in the housing market halted residential building projects.

Tim Moore, economics associate director at IHS Markit, which compiles the survey, said: "The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects.

"Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space."

It comes as the Construction Employers Federation (CEF) in Northern Ireland called on MPs to reverse their proposed reduction in Northern Ireland’s capital expenditure.

Ahead of Wednesday’s Budget Bill debate in the House of Commons, the CEF is urging MPsto reflect on the draft Stormont budget allocations and reverse the proposed £130m cut in next year’s capital expenditure.

Managing director John Armstrong said: “As the industry was preparing to hear government spending plans on the basis of there being £1.52bn of capital expenditure available in 2019/20, last week’s announcement has come as an extremely unwelcome development.

“While we as an industry do not doubt the pressures that are currently being felt across our public services, we similarly find it completely unacceptable that it is the construction industry which is expected to take a large element of these pressures.

“In recent weeks, via our State of Trade survey and our comments on the underfunding of much needed Wastewater Treatment Works, we have made it abundantly clear that not only are north of a third of local contractors on the cusp of making redundancies due to the ongoing political impasse and the inability to get public works out to the market, but also that without heavily investing in our wastewater and sewerage services we risk putting a halt to all forms of development right across Northern Ireland, not just housebuilding.

“These pressures call for an increase in capital expenditure above and beyond what the Chancellor announced in October – not the reprofiling of £130m of it.

“To put the £130m in context, it could deliver four further education colleges similar to that currently being built in Armagh or complete the entirety of the Strule Shared Education Campus or fund over half of the remaining construction works on the A6 Dungiven-Drumahoe scheme or fund the design and complete construction of the York Street Interchange

“Fundamentally, the £130m would also secure thousands of existing jobs and enable contractors to grow their workforces further.

“Instead, as a result of this proposed allocation, we are not only risking the speedy progress of the Executive flagship schemes that have yet to commence but also the smaller scale education, health and housing works which are the lifeblood of the local construction industry and their employees.

“We would therefore urge MPs to give consideration to these issues ahead of the debate in the Commons and reverse this short-sighted decision.”