Construction Loans News:- Building output carried on declining although the latest purchasing managers’ index showed the rate of contraction was the slowest in three months.
Construction companies were continuing to reduce their workforce numbers due to weak order books and concerns about the near-term business outlook. New orders dropped for the seventh month in a row during October, but the rate of decline was the least marked since July.
The 44.2 index for October was up on September’s 43.3 but close to the June’s ten-year low of 43.1 and well-below the 50 no-change threshold.
Chartered Institute of Procurement and Supply group director, Duncan Brock said housebuilding had experienced its biggest drop in three years and civil engineering the sharpest fall in a decade.
“Job hiring suffered as businesses unsure of the government’s next steps held back on their development plans, which were weakened further by stronger competition for fewer opportunities.
“Future optimism remained at 2012 levels as the deep-seated Brexit gloom dampened down expectations,” he said.
Construction companies noted clients continued to defer decision-making on new projects in response to political uncertainty and concerns about the economic outlook.
Survey respondents suggested intense competition for new work had resulted in more widespread price discounting to secure contract awards. Softer demand conditions and a lack of new work to replace completed projects resulted in another fall in staffing levels across the construction sector.
Input buying dropped again in October, but weaker demand for construction products and materials did not prevent a further lengthening of suppliers’ delivery times.
The latest downturn in vendor performance was the sharpest since June, with construction firms commenting on stock shortages among suppliers, especially plasterboard and insulation materials. However, input cost inflation was the lowest for just over three-and-a-half years.
Confidence in future outlook at a seven-year low
Business optimism towards the year-ahead outlook for construction work remained among the weakest seen since 2012.
The Federation of Master Builders chief executive, Brian Berry, said although the current Brexit delay had avoided a no-deal, it had led to further uncertainty and stagnation.
“We know that many homeowners are holding off undertaking home improvement works due to Brexit uncertainty and this is having a knock-on effect of builders workloads. It is unclear how long clients will hold off waiting for certainty, and invest their money elsewhere.”
He called for political parties to give the UK construction industry support with some radical new policies.
“The new prime minister will also need to give much-needed certainty, from day one, about the future direction of the UK and its relationship with the EU.”
Construction Loans by HZA
Brokers Hank Zarihs Associates agreed that commercial development finance lenders were hoping for clarity post the election so they could get on with offering more construction loans.