We are seeing the immediate drastic effects that Coronavirus is having on our industry with the IHS Markit/CIPS UK Construction Total Activity Index dropping to 39.3 in March from 52.6 in February.  This is in reaction to the emergency public health measures put in place by the government to help to control the spread of the virus and has seen the sharpest downturn in nearly 11 years, with new orders and onsite activities almost grinding to a halt. 

Although drastic, it has been noted that the decline is in response to the pandemic and not because of a declining market, which was holding steady before the pandemic. 

The main three wider categories of construction work recorded the following downturns in March; 

Civil Engineering Activity34.4 

Commercial Building Work35.7 

Residential Activity46.6 

New orders to construction companies have fallen sharply since March, and respondents who took part in a survey revealed that this was due to a mix of weaker demand and concerns about starting new ventures in the middle of the coronavirus crisis.  The consequential effect on supply chains has also been interrupted with reduced capacity and shortage of stock amongst suppliers. 

Confidence in the construction sector is currently shaken and many respondents to the survey revealed a gloomy outlook for the year ahead with low expectations for acquiring new business.  This is purely as a result of the economic crisis that has been triggered as a result of the pandemic.   

Tim Moore, Economics Director at IHS Markit, which compiles the survey commented: “March data provides an early snap-shot of the impact on UK construction output from emergency public health measures to halt the COVID-19 pandemic, with activity falling to the greatest extent since the global financial crisis.  

“The closure of construction sites and lockdown measures will clearly have an even more severe impact on business activity in the coming months. Survey respondents widely commented on doubts about the feasibility of continuing with existing projects as well as starting new work. 

“Construction supply chains instead are set to largely focus on the provision of essential activities such as infrastructure maintenance, safety-critical remedial work and support for public services in the weeks ahead.”