British builders report that Brexit anxiety is creating delays in new projects, and making it harder to get materials
- Latest: UK construction PMI hits 11-month low
- Stockpiling creates shortfall of building materials
- Introduction: US and China ‘close in’ on trade deal
In a separate piece of bad news, the company behind the Giraffe and Ed’s Easy Diner restaurants is planning to shut 27 outlets, putting hundreds of jobs at risk.
Britain’s struggling builders need help from the government, says economist Howard Archer of the EY Item Club.
That means some clarity over Brexit (MPs will hold crucial votes on Theresa May’s deal, no-deal, and an article 50 extension next week). It also means more support to spur on major construction projects, and housebuilding.
On the employment front, some building firms have decided not to replace staff who have left – due to concerns about the business outlook.
Others. though, say they took on trainees to cover skills shortages. That might be due to the drop in EU migration since the Brexit vote.
Economist Rupert Seggins shows how UK civil engineering and commercial property construction both contracted last month (dropping below the 50-point mark on the monthly PMI index).
1. UK construction PMI hit 49.5 in Feb, down from 50.6 in Jan. Commercial and civil engineering construction were the drivers, with both recording falls. In a by now fairly familiar pattern, house building did better than those other two areas and continued to grow. pic.twitter.com/wr4oQLJzo3
“Construction firms have their heads down in contingency planning for every outcome, but what this means for the long-term health of the sector is uncertain. It seems as though many businesses are in defensive mode and do not have the confidence or clarity to make future plans.
Britain’s construction could soon be dragged into recession, fears Markit’s Chris Williamson.
UK #Construction #PMI indicates renewed decline and increased likelihood of sector falling into recession in first quarter. Apart from March 2018, the latest PMI was the worst for almost 1½ years. Snow could not be blamed this time!https://t.co/94jWUWXCv1 pic.twitter.com/2iWGjntiP2
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, says Brexit is hurting UK builders — by spooking clients, and creating shortages of key materials.
Commercial and civil engineering activity was pushed into the red, as client uncertainty over placing new orders left its mark. This meant the relatively weak residential building sector was the best performer. However, with consumer confidence also waning, housing is likely to follow suit in the coming months.
The domino effect of stockpiling by other sectors such as manufacturing impacted on supplier performance, as builders competed for dwindling supplies of raw materials, while transportation availability also became a problem, leading to supply chain bottlenecks. This meant that purchasers were subjected to the second- longest delivery times since March 2015, affecting work already in-hand.
Newsflash: Activity across Britain’s construction industry has declined as Brexit uncertainty hits confidence, and leave builders struggling to get their hands on materials.
Data firm Markit reports that business activity levels fell during February, the first decline in 11 months.
“The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects. Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space. The fall in commercial work therefore hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.
“There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year. This leaves the construction sector increasingly reliant on large-scale infrastructure projects for growth over the year ahead.
Get your diaries out. A US-China trade deal could be signed by presidents Xi and Trump on 27 March.
China is reportedly even offering to buy 50 million litres of Jack Daniels whiskey, to help smooth a trade deal.
That’s a canny idea, politically. Jack Daniels is one of the US products targeted by Beijing last year when it announced retaliatory tariffs against American goods – hurting farmers in the Tennessee region.
The fact that China want 50m litres of Jack Daniels should probs to you this will be a trade deal with the foundations of BluTack.
Presumably as sheep-dip https://t.co/EaO0qwruRy
China’s parliamentary spokesman Zhang Yesui says Beijing hopes to achieve a ‘win-win’ trade deal with America.
Zhang told reporters that officials have conducted “fruitful and intensive consultations and made important progress on many issues of common concern.”
“We hope that the two sides will continue to hold consultations and reach a mutually beneficial and win-win agreement.”
Optimism that the US and China are inching towards a trade deal sent shares sharply higher in Shanghai today.
China’s stock market jumped by over 1% this morning, to their highest level since mid-June.
– Chinese stocks rose to their highest level since June
– Shanghai Composite Index ⬆️ 1.1%
– Hong Kong’s Hang Seng Index ⬆️ 0.7%https://t.co/hsn0KKrJYd
The wind is blowing in favour of a trade deal between the US and China, and in favour, at the moment, of the UK achieving a ‘soft Brexit’ which is probably mostly priced in for now.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
As part of a deal, China is pledging to speed up the timetable for removing foreign-ownership limitations on auto ventures, and to reduce tariffs on imported vehicles to below the current rate of 15%, the WSJ reported.
A senior administration official cautioned on Sunday that a decision had not yet been made over lifting the U.S tariffs. The official also said a debate was continuing inside the administration with Trump unlikely to make a decision before a deal was closer to being done, likening to situation to the debate over what to do with U.S. sanctions in the lead-up to last week’s summit with North Korea’s Kim Jong Un.
I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions….
….and I did not increase their second traunch of Tariffs to 25% on March 1st. This is very important for our great farmers – and me!
Global stocks started week on front foot w/ China’s bourses leading advance on signs US & China were close to striking a tariff deal to end their trade war. Bond yields continue to rise w/US 10y at 2.76%. Pound gains as May receives boost from pro-Brexit hardliners. Gold <$1.3k. pic.twitter.com/ihgmXGDS7a