RISING costs and uncertainty relating to Brexit are to blame for the sharp drop in output growth in January 2019, the Federation of Master Builders (FMB) has said in response to the latest Purchasing Managers’ Index data (PMI).
The Chartered Institute of Purchasing and Supply (CIPS) Construction Purchasing Manager’s Index incorporates survey results provided by construction firms throughout the country.
A reading above fifty suggests the construction sector is expanding, while a reading below fifty suggests the construction sector is in contraction.
The January 2019 PMI data revealed a fall from 52.8 in December to 50.6 in January, against the neutral reading of 50.0. January data pointed to a loss of momentum for the UK construction sector, with business activity growth grinding to its weakest for ten months.
All three categories of construction output recorded weaker trends than those reported in December.
Residential work was the strongest performing area, although the latest expansion was only modest and the slowest seen since March 2018. Civil engineering activity increased marginally, with the rate of growth much softer than December’s 19-month high.
Commercial work was the weakest performing area of construction output in January. Latest data indicated a decline in work on commercial construction projects for the first time in ten months. Anecdotal evidence suggested that Brexit-related anxiety and associated concerns about the domestic economic outlook continued to weigh on client demand.
New business growth eased to an eight-month low in January.
Construction firms widely commented on softer demand conditions and longer sales conversion times, reflecting a wait-and-see approach to spending by clients. Concerns about the near-term outlook for new projects resulted in more cautious staff hiring policies at the start of 2019. The latest survey pointed to the slowest rise in employment numbers since July 2016.
However, construction firms remain positive about the outlook for business activity in 2019. Around 41% of the survey panel anticipate a rise in output, while only 16% forecast a fall.
Optimism had, however, fallen month on month. Large-scale civil engineering projects were cited as a key source of optimism, while Brexit uncertainty was the most commonly cited concern.
Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey: “UK construction growth shifted down a gear at the start of 2019, with weaker conditions signalled across all three main categories of activity.
“Commercial work declined for the first time in ten months as concerns about the domestic economic outlook continued to hold back activity.
“The latest survey also revealed a loss of momentum for house building and civil engineering, although these areas of the construction sector at least remained on a modest growth path.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said: “The sector suffered a sharp drop in output growth in January, and the softest rise in purchasing volumes since September 2017, as Brexit continues to hamper progress and dampen client confidence.
“The biggest shock came in the form of job creation which has managed to suffer the slings and arrows of Brexit highs and lows with solid hiring since the referendum result. Employment rose at the slowest rate since July 2016 and with optimism also in short supply, the sector only needs a small nudge to tip it closer to a recession.”
Commenting on the results, Brian Berry Chief Executive of the FMB, said: “The latest PMI data show a slowdown in growth in construction with business activity growth easing to its weakest for ten months. The ongoing political uncertainty is partly to blame for this setback.
“Political uncertainty is the enemy of construction firms that rely on the spending power of homeowners to commission home improvement projects. The UK is set to leave the EU next month, and yet we are still none the wiser about what the future holds. Given these intense headwinds, it should not be surprising that the sector suffered such a sharp decline.”
Mr Berry continued: “Alongside the political uncertainty, the cost of doing business is also rising for construction firms up and down the country. Material prices have been rising steadily since the depreciation of sterling following the EU referendum.
“Looking ahead, material prices are expected to continue to cause a headache for the construction industry with recent research from the FMB showing that 87% of builders believe that material prices will rise in the next six months. What’s more the construction skills crisis means that key trades are extremely difficult to recruit and the upshot of this is rising wages in construction.
“Tradespeople know they can command higher salaries than they did previously as workers are scarce, and this means a squeeze in margins for firms. This will only worsen if the post-Brexit immigration system that the Government has planned goes ahead.
“If the sector isn’t able to draw upon crucial EU workers of all skill levels, who have so far served to mitigate this shortage, the slowdown of growth will continue.”
What makes Wales special?
THIS MONTH sees Visit Wales’ first ever targeted digital campaign happening in Wales. It will encourage those with arguably the best knowledge of all, the people of Wales, to share images of the places that they love and how they enjoy them.
There is also an opportunity to be featured in Visit Wales’ ads, as a selection of the best images shared on social media will be part of the next phase of the campaign.
The Year of Discovery is the perfect time to re-discover places from childhood, or discover a new corner of Wales.
Visit Wales would like as many people as possible to get involved. What makes Wales so special? Where do you like to spend your weekends in Wales? Where’s your favourite beach, pub or dog walk? These special moments in Wales can be captured by tagging #thisismywales on your Instagram or Pinterest posts.
The in-Wales market is especially important to Wales. In 2017 there were 1.47m overnight stays by Welsh residents staying in Wales. That is 16% of all overnight trips taken in Wales by GB residents, and these trips generated £228 million for the Welsh economy.
In addition, there were 62 million tourism day visits taken in Wales by Welsh residents. This is 63% of all day trips taken in Wales. The expenditure on these trips was £2.21 billion.
Dafydd Elis Thomas, the Deputy Minister for Culture, Sport and Tourism, said: “This is an excellent time for the people of Wales to share what makes Wales special to them – it’s all about pride and passion and the people of Wales are often the best ambassadors and travel guides to what can be found locally.
“It’s possible that Brexit uncertainty means that more people will take a staycation this year. A targeted and flexible digital marketing campaign means that Wales is well placed to make the most of these opportunities.
“Marketing work has been gathering momentum since early March in key markets in recognition of the strong competition for the domestic market – so that Wales is front of mind as a holiday destination during our Year of Discovery.
“As part of a refreshed visitwales.com, celebrities such as Alex Jones, Matthew Rhys and Huw Stephens have already shared their favourite things about Wales.”
Brexit delay affects hauliers
THE GOVERNMENT and the EU have agreed on an extension of the UK’s membership until October 31, 2019, at the latest.
This means you can continue to operate across the EU as usual until then.
While the Government hopes to leave before then, we will only leave earlier if a deal is agreed, which would allow continued permit-free access arrangements to continue.
This means that either:
• The UK leaves the EU without a deal on October 31, 2019; or
• The UK leaves the EU with a deal, before October 31, in which case, access to the EU will remain unchanged until 2021.
So until October 31 at the earliest, you can continue to operate across the EU as you do now, without the need for an ECMT permit.
The EU has also passed a new law ensuring that, even if the UK leaves the EU without a deal on 31 October, more than 90% of journeys to the EU won’t require an ECMT permit for the remainder of 2019.
Regardless of when the UK leaves the EU, you must register any trailers you plan on using for journeys outside the UK and Ireland.
This new requirement came into force on March 28, 2019.
If you fail to register your trailer, you may be fined or subject to other enforcement action.
Enterprising Students win £10K prize
A NEW venture designed to help Colombian farmers improve crop productivity is the winner of the latest edition of Aberystwyth University’s ‘Dragon’s Den’ style student entrepreneurship competition InvEnterPrize.
Developed by an interdisciplinary team led by PhD student Liliana Castillo from Colombia, Amigrow uses satellite technology and machine learning to assist farmers with decision making.
Along with the 2019 InvEnterPrize title, Amigrow receives £10,000 to invest in the development of the concept to bring it closer to market.
Speaking of the team’s success, Liliana said: “Winning InvEnterPrize is very important to us, there are no words to describe the feeling.”
“This idea started with my experience of agriculture in Colombia. With the support of InvEnterPrize, my team and I look forward to start testing the capabilities of Amigrow. We are going to develop the first prototype and create iterations of it so that we can really know what works and what doesn’t, and produce something meaningful for the farmers so they can take the right decisions at the right time and produce better profit margins.”
Liliana added: “Colombia is a very diverse country, we have very different environments for very different kinds of crops. Initially, we are going to start with rice producers as it is very important for feeding people in Colombia and in the world.”
Amigrow was one of 15 entries for InvEnterPrize 2019, and six finalists to present their ideas to the judges on Friday 29 March 2019.
Chair of the judges, Donald Davies, Emeritus Professor in Toxicology at Imperial College London, said: “We are delighted to award InvEnterPrize 2019 to Amigrow and our warmest congratulations to Liliana and her team on their venture.”
“InvEnterPrize is an excellent competition which brings out the best in the students, and this year has proved to be the most difficult to judge with all six finalists delivering excellent presentations. It clearly inspires students here at Aberystwyth University to venture and develop ideas that go beyond what they might normally do. It is so important to sow the seed of an idea that students can develop into a business, and this competition, along with the support the teams receive throughout the year from the University’s Careers service, makes this all possible.”
InvEnterPrize organiser and Aberystwyth University entrepreneurship champion, Tony Orme, said: “The quality of the entries this year has been exceptional and the final proved to be a very close run indeed. We are immensely grateful to our panel of judges for their valuable time and expertise in this year’s search for a winner, and to the University’s alumni who make this competition possible via the Aber Fund. We now look forward to working with Liliana and colleagues on Amigrow, as the concept is developed.”
Amigrow also enjoyed further success at InvEnterPrize 2019 as it won a year’s office space at AberInnovation – the Aberystwyth Innovation and Enterprise Campus, a £40.5m development at the Aberystwyth University Gogerddan Campus.
Presented by Dr Rhian Hayward, Chief Executive Officer of AberInnovation, the award was given for the best presentation in the bioscience, agri-tech, and food and drinks sectors.
Now in its 6th year, InvEnterPrize was established to further encourage a culture of entrepreneurship among the University’s students.
The £10,000 prize provided by the University’s alumni via the Aber Fund enables the winner to invest in equipment, facilities or professional services to turn the invention or business start-up idea into reality.
Entrants also had the opportunity to seek expert advice and attend a series of workshops and presentations led by successful entrepreneurs as they developed their final bids, gaining valuable advice on the way.
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