The UK construction purchasing managers’ index (PMI) contracted for the eighth straight month to 44.4 in December from 45.3 in the prior month in response to Brexit uncertainty and spending delays ahead of the country’s general election. 

 

The construction index indicating that most businesses surveyed reported a deteriorating operating environment as readings below 50 indicate an industry contraction.

 

All three sub-indices of the headline construction PMI index contracted in December, with civil engineering seeing the fastest pace of declines of activity since March 2009; possibly even contributing to the insolvency of UK iron and steel foundry group Bondholds Ltd.

 

Commercial sector projects fell sharply too with many firms postponing investment decisions ahead of the general election. House building in December fell for a seventh consecutive month running, but the rate of decline was more modest.

 

Survey participants also recorded a noticeable reduction in new business orders, albeit the pace of contraction improved from the ten-year low witnessed in August; meaning it could take several months for project pipelines to recover and many months more to impact steel consumption.

 

A reduced pipeline of new projects has unsurprisingly led to falling demand for construction products and materials, with the resulting decline in purchases alleviating pressure on the supply chain and reducing average lead times to their shortest level since September 2010.

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