Construction sector snowed in by Brexit - BLP Insurance comments on latest PMI
- Date: 02/04/2019
Following the release of today’s Construction PMI figures, Phil Harris, Director at BLP Insurance, comments on the sector:
“After slipping into contraction last month, it was unsurprising to see little positive momentum in today’s PMI figures. The ‘Beast from the East’ ravaged the sector last March, but a year on and the market has been snowed in by Brexit.
“Ongoing negativity was added by Interserve, the second significant construction player after Carillion to dance on the edge of the abyss. The lenders’ bailout may have averted disaster but uncertainty remains rife for subcontractors worried about getting their pay cheques, let alone the sustainability of the big players’ business models.
“Meanwhile, the retail sector remains at a crossroads, and the industry continues to grapple with prospects of structural change as the move away from commercial office space towards new flexible working routines gains traction.
“In a month where the never ending parliamentary Brexit debates still produced no clarity, the construction sector continued to suffer from the lack of political progress. The fundamentals of a healthy construction sector remain, with pent-up inward investment raring to dive in but the safety catch remains firmly stuck on the starting pistol.
“The announcement of £3bn towards affordable homes in the Chancellor’s Spring Statement, along with new planning guidance to support housing diversification and build out rates, could have an uplifting effect if the paralysis of Brexit is finally resolved. Elsewhere, the message sent out by Persimmon’s home buyers ‘retention’ scheme was also good news for the residential sector that it has long kept buoyant.
“With market sentiment long priced in, any respite from Brexit could see a strong bounce back in the coming months, but inertia and uncertainty remain for now.”