Two surveys suggest construction industry is showing signs of recovery

The UK construction industry showed signs of recovery in August, contracting less than in the previous month, according to latest reports.

The Markit/CIPS purchasing managers’ index (PMI) increased to 49.2 in August, but stayed below the 50 level, which indicates contraction. The index was higher than July’s level of 45.9, which represented its lowest point for seven years.

Tim Moore, senior economist at Markit, said: "Construction firms cited a nascent recovery in client confidence since the EU referendum result and a relatively steady flow of invitations to tender in August.

"However, the latest survey indicates only a partial move towards stabilisation, rather than a return to business as usual across the construction sector.”

The findings of a separate major survey for the building services engineering sector, revealed there is confidence that the industry will successfully weather the outcome of Brexit over the next few years.

The findings from the Electrical Contractors’ Association (ECA), the Building Engineering Services Association (BESA) and SELECT, show almost half of survey respondents (46 per cent) believe Brexit will have a positive impact on their company in just five years’ time.

Less than one in five (19 per cent) felt it will have a negative impact. The sector puts maintaining access to the EU ‘Single Market’ at the top of its list of Brexit aspirations, closely followed by more control of employment law and the need to negotiate non-EU trade deals.

Despite the general positivity about Brexit, 47% of respondents believe the cost of materials will rise as a result.

BESA chief executive Paul McLaughlin added: “Our survey clearly shows that many contractors are conditionally optimistic in the wake of the Brexit vote.

“In fact, putting these findings alongside the brighter than expected data for the UK economy as a whole gives us a much more upbeat feel than could reasonably have been predicted back in June.

“The survey provides extremely valuable feedback about what matters most to contractors as the UK sets about negotiating a new relationship with Europe. As a result, we will draw up an action plan for the building engineering services sector to focus our lobbying efforts in the coming months.”

Adam Davis, a Partner with Palmers who specialises in construction law, said: “These two surveys are positive news for the construction industry. Although there is still much to be hammered out with the Brexit deal, the general feel-good factor that is being reported is certainly encouraging. Businesses need to make sure they are prepared for the changes that are ahead as post-referendum negotiations begin to take shape, so that they are in a position to fully embrace new construction and engineering opportunities.”

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