Kate Kirby, construction and infrastructure partner at global legal business DWF (LON:DWF), has given a pessimistic outlook for the construction sector.
While global stock markets look back fondly on 2017 and 2018, 2019 and the beginning of 2020 offered little certainty or reason to celebrate.
Markets are weighed down by widespread political uncertainty. These are the result of the rise of populist movements across the ‘West’ and the challenges posed by the US and China competing for global hegemony.
Today’s Construction PMI numbers brought some celebratory mood, but this optimism has been sharply reversed. Real estate, manufacturing and construction will all have to contend with the practical challenges of Brexit, Phase 2 of the US-China trade deal, and even the coronavirus. Today’s rally is probably some light relief in a situation that still appears to be fraught with uncertainty.
Commenting on the results, DWF’s Kate Kirby said:
“Like manufacturing, the construction industry is highly dependent on economic certainty and, as we all know, supply was tight throughout 2019. However, 2020 is looking a little better off to a start. Although there were signs of improvement in January, with the slowdown in the construction sector easing to its lowest pace in eight months, the largest contributors to the decline in output were civil engineering and commercial construction. That’s troublesome.”
“The latest construction PMI data is unlikely to bring any real reassurance. While this recovery is a welcome sign, the risk of the sector contracting again remains. The construction industry could see a see-saw of good and bad news in the coming months due to the political climate and attempts to navigate this year’s trade deals.
