The UK’s construction industry has slumped to its lowest activity levels since records began, with social distancing measures and a lack of materials caused by the coronavirus crisis said to be crippling work on building sites across the country.
The latest reading of the closely-watched IHS Markit/CIPS UK construction purchasing managers’ index (PMI) is the lowest since records began, in 1997.
It was just 8.2 in April – down from 39.3 in March.
The previous low was 27.8, which was recorded at the height of the last financial crash in 2008, while anything below 50 in considered as decline.
It comes as construction companies across the UK shut building sites, with many bosses citing social distancing fears and a lack of materials.
One expert has described the figure as a ‘total collapse’ and warned it could take up to two years for the industry to recover.
Britain’s construction sector has slumped to its lowest activity levels since records began with social distancing measures and a lack of materials crippling building sites up and down the country. Pictured: Construction workers on a building a site in Paddington, London, last month
The closely-watched IHS Markit/CIPS UK construction purchasing managers’ index (PMI) showed a reading of just 8.2 in April – down from 39.3 in March and the lowest since records began in 1997. Pictured: Workers enter a building site in Paddington, London, last month
Samuel Tombs, an economist at Pantheon Macroeconomics, said of the reading: ‘In one line – a total collapse.’
He added: ‘Demand for office space likely will remain extremely weak, now that firms have adapted to their employees working from home and are looking to cut costs.
What is the construction purchasing mangers’ index?
Purchasing Managers’ Index (PMI) data is compiled by IHS Markit for more than 40 economies worldwide.
The monthly data is derived from surveys of senior executives at private sector companies.
The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories.
‘Accordingly, we doubt that construction output will return to its pre-virus high until 2022.’
Mr Tombs also warned that PMIs for the three biggest sectors of the economy so far have suggested a 13 per cent plunge in UK gross domestic product (GDP) over the second quarter, but warned that the IHS Markit/CIPS UK construction PMI reading ‘almost certainly understates the damage’.
The latest figures comes after eye-watering collapses in activity for services and manufacturing last month, with PMI readings of 13.4 and 32.6 respectively.
There has been some good news for the construction industry however.
Homebuilder Taylor Wimpey resumed construction on May 4, while rivals Vistry Group and Persimmon re-started at the end of April.
Bosses at Taylor Wimpey ordered its sites, show homes and sales centres to be closed in March, as the coronavirus crisis gathered pace.
The company said it will re-start activity on most sites in England and Wales using ‘detailed new site operating protocols’ which comply with social distancing rules.
One expert has described the latest PMI figure as a ‘total collapse’ and warned it could take up to two years for the industry to recover. Pictured: Workers enter a building site in London last month
The previous low was 27.8, which was recorded at the height of the last financial crash in 2008, while anything below 50 in considered in decline. Pictured: Workers enter a building site in Lewisham, London, last month
Taylor Wimpey said trading has ‘inevitably been impacted’ by the virus, but demand has continued, with sales teams continuing remotely.
Meanwhile, Vistry said last month it planned to re-start work on 90 per cent of partnership sites and a ‘significant number’ of housing sites.
The company, which was recently renamed from Bovis Homes, also said it had received 80 cancellations and completed 193 private sales following the pandemic.
Despite the good news, some experts fear the ongoing shortage of raw materials and safety products may constrain activity across the sector for some time to come.
Persimmon restarts work under strict social distancing rules
Persimmon has said it will restart construction work within days, following similar moves by other major housebuilders.
The company yesterday said it will resume building from April 27, with sites reopening in phases.
Workers will follow strict social distancing rules, meaning in practice that they will have to remain two metres apart at all times – except for work deemed ‘essential’ that requires them to stand closer together.
Persimmon said the decision followed talks between industry figures and the Government, which wants to get the construction sector ‘back to work’.
The company said it would be able to resume work quickly because, unlike other housebuilders, it has not furloughed any staff using taxpayer-funded schemes and has kept everyone on full pay.
Persimmon’s boss David Jenkinson said: ‘Having spent the last month developing and testing new site protocols that incorporate the necessary social distancing and protective measures, we believe that we are now able to return to site safely and support the UK’s economic recovery from the pandemic.
‘These new measures are fully compliant with government public health guidance and will be strictly enforced.’
Tim Moore, economics director at survey compiler IHS Markit, said: ‘A drop in construction activity of historic proportions in April looks set to be followed by a gradual reopening of sites in the coming weeks, subject to strict reviews of safety measures.
‘However, the prospect of severe disruption across the supply chain will continue over the longer term and widespread use of the Government job retention scheme has been needed to cushion the impact on employment.’
Meanwhile, union chiefs have raised concern over a restart in construction work.
As previously reported by MailOnline, Unite said the latest guidance being given to construction workers was unsafe and placed them at unnecessary risk.
The union said latest operating procedures were issued to coincide with a return to work at a large number of sites last month, particularly in the London area.
The guidance now states that where workers are required to work within two metres of each other, they should ‘work side by side, or facing away from each other, rather than face to face’, the union said.
When this is not possible and workers have to work ‘face to face’ within two metres of each other, workers should ‘keep this to 15 minutes or less where possible’.
Unite national officer Jerry Swain said: ‘Construction workers’ health is being threatened by watered down advice. Alok Sharma must step in immediately and have these defective procedures withdrawn.
‘We sincerely hope that this is not a case of the economy being put before the health of construction workers and their families.
‘Unite’s position remains unchanged – no site should be working unless it can do so safely and that means two-metre social distancing must be maintained at all times.
‘Contractors and clients also have a moral duty of care for workers from when they leave their home to when they return.
‘Construction workers should not be forced to use overcrowded public transport, potentially endangering their health and that of our key workers.
Homebuilder Taylor Wimpey resumed construction on May 4, while rivals Vistry Group and Persimmon re-started at the end of April. Pictured: Construction workers at a building site in Lewisham, London, last month
Despite the good news, some experts fear the ongoing shortage of raw materials and safety products may constrain activity across the sector for some time to come. Pictured: Construction workers at a building site in Lewisham, London, last month
‘If our members believe their health is being directly compromised, they should stop work and seek the assistance of Unite.’
A campaign was launched weeks ago to stop building work on everything other than essential projects, such as those for the NHS.
A spokesman for the #shutthesites campaign said: ‘Even when safely social distancing, I am restricted by law from sitting on a park bench, chatting to a neighbour or visiting my family.
‘Yet I can travel 40 miles into central London on public transport whilst mixing with genuine key workers to work hand in hand with other construction workers.
‘The priorities of this Government are economy over workers’ health and the new Construction Leadership Council Site Operating Procedures does not alleviate the worries of hundreds of thousands of construction workers on site today.’
A spokesman for the Blacklist Support Group added: ‘When construction workers go to work, they share minibuses, travel on packed Tubes, eat in crowded canteens, go up in full hoists, use palm print entry systems and live in barrack-style accommodation on site.
‘Construction is a dirty, dangerous place at the best of times with notoriously poor welfare facilities, where the very process requires people to work in close proximity. Coronavirus will spread like wildfire in these circumstances.’