Weather disruption in March has been blamed for the steepest drop in construction activity since July 2016, according to the latest PMI survey.
The construction purchasing managers’ index from IHS Markit / CIPS – where an index figure of 50.0 indicates no change in activity – dropped from 51.4 in February to 47.0 in March.
This marked the first outright contraction in activity since September last year, with the decline blamed on disruption caused by last month’s heavy snowfall.
Civil engineering works were particularly badly hit in March, activity falling to its lowest level in five years, while commercial output also contracted.
Chartered Institute of Procurement and Supply group director Duncan Brook said: “It’s a few years since the UK experienced such bad weather in March and it’s obvious that supply chains were woefully unprepared to deal with the disruption.”
Lloyds Bank relationship director for construction Max Jones said: “A dip in the reading, although affected by March’s freezing weather, caps off a difficult quarter for the sector following the collapse of Carillion, persistently high input prices and continuing economic uncertainty.”
He added: “It all suggests a mixed picture, and a reading below 50 is unsurprising at a time when official data suggests construction is technically in recession.”
Despite declines in many sectors during March, the PMI survey recorded an uptick in residential work.
However, Mr Brook suggested the housing sector was nevertheless underperforming.
He said: “The marginal improvement in residential building was softer than in most of 2017, indicating there may be something more serious ailing the sector, as respondents also cited continuing Brexit-related uncertainty and disappointment over the performance of the UK economy.”
March also saw new orders fall to their lowest level since July 2016, with respondents to the survey citing lower general demand and in some cases weather-related disruption putting clients off.
IHS Markit / CIPS said the decline in new orders had been a trend since the start of the year.
Material price pressure eased in March to a 20-month low, but the average cost of subcontractors increased at its fastest rate for six months.
Staff hiring increased in March to its highest level in 2018, which was attributed to upcoming project starts and long-term expansion plans.
IHS Markit / CIPS said the hiring increase suggested the market would improve in the coming months.
Naismiths managing director Blane Perrotton said: “In the final analysis, March’s poor performance is likely to be viewed as a frustration rather than a fundamental weakness.
“Such extreme weather is highly unusual in March, and while the industry was clearly underprepared for such disruption, it’s likely to be a one-off.
“Order books remain strong outside London, suggesting that there is sufficient momentum to ensure March’s miss is a blip rather than a longer-term slide.”