Latest IHS/Markit data warns of 鈥榳idespread discounting鈥� to secure jobs

Panicked firms are stockpiling new contracts with cut-throat bidding, the latest survey of construction buyers has warned.

Data from the IHS Markit/CIPS index said 鈥渞espondents [had] suggested that intense competition for new work had resulted in more widespread price discounting to secure contract awards鈥�.

A number of firms have told 黑洞社区 that firms have been spooked by a slump in work caused by a no-deal Brexit and have been lining up jobs to cover the ongoing slowdown caused by the UK鈥檚 departure from the EU 鈥� which has so far bust three deadlines.

One said: 鈥淭here鈥檚 a number of firms who are super-keen for everything. It鈥檚 the pre-Brexit period that鈥檚 making firms go in low.鈥�

Tim Moore, economics associate director at HIS Markit, added: 鈥淭here are clear signs that construction firms are positioning for an extended soft patch for project starts.鈥�

city skyline

A number of major schemes in the City of London have recently completed or are coming to an end

The survey said slowing orders are forcing contractors to cut staff numbers with staffing levels falling again in October after declines every month since April.

It said this was being driven by not enough work to replace completed jobs while EU workers had decided to return to their countries of birth, in part fuelled by the slump in the value of sterling.

IHS Markit/CIPS鈥� PMI index reported a score of 44.2 in October, up on September鈥檚 43.3. Any score below 50 indicates contraction.

Civil engineering work saw output fall at the fastest rate for a decade and housebuilding activity fell sharply, with the latest data suggesting the largest drop in residential work for three years.

Commercial construction also fell for the tenth month in a row, the survey added.

Jan Crosby, the UK head of infrastructure, building and construction at KPMG, said the rest of 2019 was unlikely to be much better given Brexit has been delayed again and a general election will be held on 12 December.

He said: 鈥淭here had been pockets of optimism in the run up to 31 October [the latest date for the UK鈥檚 departure from the EU], largely because people were looking forward to some form of clarity around the future of the sector. But Brexit uncertainty has returned once more, coupled with a general election to boot.鈥�

He said the remaining weeks of the current year would be dominated by 鈥渟talled activity, dampened confidence and a 鈥榳ait-and-see鈥� approach to new work. Many clients are likely to hold off until next year before committing to any large-scale projects in the hope they can make more informed decisions.鈥�

The score of 43.1 in June remains the index鈥檚 10 year low.

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