House builders optimistic about year ahead but commercial developers less so

The construction industry in the UK overall is its least optimistic for five years amid fears over Brexit and an economic slowdown, but house builders are more optimistic, new research shows. Some building firms won the most work for several months in December but the number of companies expecting a rise in output levels over the next 12 months was the weakest recorded since the middle of 2013, according to the Markit/Cips UK construction index. However, the dip in the PMI appears to be largely due to falling levels of commercial work and this is offset by a growing numbers of house building projects. Indeed, the prospect of greater workloads led firms to take on staff and buy materials at the fastest pace in two years over December. According to Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, support from the Government should keep house building going in 2018, although he warned construction output overall was likely to be flat. Overall just over a third of construction firms in the survey see an increase in activity over the course of 2018, while 11% anticipate a reduction. They say they are facing strong cost pressures as a result of the weak pound and Brexit driving up the cost of importing materials. It should not be a surprise that Brexit is having an effect on commercial and industrial output, according to Steve Mansour, chief executive officer of construction insurance specialist CRL.