The UK construction PMI has rebounded from a weak start to 2020 and is now its best monthly performance since 2015.
The ‘Boris Bounce’ refers to the surge in demand for residential and commercial construction work since the political deadlock was broken in December last year, with the rate of new construction orders reaching the highest since 2015.
As a result, the overall PMI reading for February was 52.6, up from 48.8 the previous month. The survey, conducted by IHS Markit and the Chartered Institute of Procurement and Supply, showed new orders increased for the first time in nine months, with a score of 50 or above indicating growth. It is also said that new infrastructure projects such as HS2 are having a positive impact on housebuilding sentiment and could lead to increased demand outside London.
Commenting on February’s strong construction PMI, Kate Kirby, construction and infrastructure partner at global legal business DWF, commented:
“British construction companies signaled a recovery in business activity growth in February after nine months of weakness, with new orders increasing by the strongest since December 2015 and the biggest increase since the end of 2018. This is likely due to the expected general affairs impact.”The electoral ‘recovery’ will be a welcome boost for the sector. ”
coronavirus fear pandemic
According to most people, the main negative factor weighing on sentiment around the world is probably the coronavirus.
It has already been documented that the world’s over-reliance on Chinese products has been exposed by this disease outbreak, and the disruption caused to supply chains is likely to impact the flow of construction materials.
This could mean that the current fragile upturn in real estate sector sentiment could reverse sooner or later as companies look to put their plans on hold.
Echoing this somber outlook, Kate Kirby continued:
“At issue now is the impact of the coronavirus outbreak on global supply chains for construction materials and labor, which is likely to result in significant project delays. Investors are speculating that the global economy could see its slowest growth since 2019, but is it likely that similar growth will be reported in the coming months? Sho.”
Is the construction industry bullish on Brexit?
According to the IHS Markit survey, construction companies said activity began to pick up after Brexit was completed, which was seen as a source of uncertainty. The biggest rebound came from residential construction, which recorded its best performance since July 2018.
To me, this seems completely counterintuitive. Indeed, the symbolic Brexit deadline has passed and we are one step closer to the end of this political chapter, but is the worst of the uncertainty yet to come?
Analysis of a potential trade deal with the US paints a pessimistic picture for UK growth, but no other agreements on economic partnership have yet been envisaged and there are no discussions on the movement of people or goods. It’s similar, but I don’t understand it. Why isn’t there a dip on the horizon?
At least, it seems intuitive that now is not the time to buy. Brexit has not yet dealt a decisive blow to market sentiment. I believe that time will come, not to mention that there will be further difficulties for Britain in the not-too-distant future. The benefits of unstable emotions.
That said, we can enjoy these construction PMIs while they last and encourage buyers to get serious.
