'Beast from the East' forces sharp drop in construction output

Heavy snow and freezing conditions that swept the UK in March caused the steepest drop in construction output since the aftermath of the Brexit vote.

The IHS Markit/CIPS purchasing managers’ index for March fell from 51.4 in February to 47.0. A figure below 50 indicates declining activity. Economists on average expected a reading of 51.0.

The fall was the steepest for the industry since July 2016, shortly after business confidence was rattled by the shock vote for Britain to leave the EU. The fall in March was led by civil engineering, where work declined at its sharpest rate for five years. Commercial output also fell while housing activity had a small increase.

Respondents to the survey blamed the steep fall on the "Beast from the East" - a Siberian weather system that battered the UK with snow, strong winds and sub-zero temperatures.

Behind the weather-related disruption new business volumes continued to fall and were also at their weakest since July 2016. However, the soft patch looks likely to end after firms hired more workers for expected new projects.

Business expectations in the building sector strengthened to a nine-month high, possibly reflecting a wider uptick in confidence after the UK and EU reached a preliminary agreement on a transition period for Brexit. But political and economic uncertainty continue to weigh on sentiment.

Tim Moore, associate director at IHS Markit, said: "The construction sector continued to experience subdued business conditions during March, but snow-related disruption was a key factor behind the marked decline in activity on site.

"A solid rise in employment numbers and the rebound in business expectations provide an indication that construction activity will strengthen over the near-term. However, survey respondents noted that underlying demand remains constrained by heightened economic uncertainty and risk aversion among clients."