DWF says PMI rebound not enough to rebuild deflated construction sector

DWF says PMI rebound not enough to rebuild deflated construction sector

Kate Kirby, Construction & Infrastructure Partner at global legal business, DWF (LON:DWF), offered a pessimistic outlook on the construction sector.

With global equities looking back fondly at 2017 and 2018, 2019 and the start of 2020 have offered little in the way of certainty or reasons to celebrate.

Markets have been weighed down by prevailing political uncertainties. These being brought about by the rise of populist movements across the ‘West’, and the challenges being posed by the US and China wrestling for global hegemony.

Today’s construction PMI figures offered some cause for celebration, however this optimism largely goes against the grain. Property, manufacturing and construction will all have to contend with the practicalities of Brexit, a Sino-US trade deal second phase and even Coronavirus. Today’s lift is perhaps light relief against what appears to remain a backdrop of uncertainty.

Speaking on the results, Kate Kirby of DWF stated:

“Like the manufacturing sector, construction is highly reliant on economic certainty and, as we all know, that was been in short supply throughout 2019. However, the start to 2020 looks a little better. There was some sign of improvement, in that the slowdown in the construction sector eased to its slowest pace in eight months in January but the fact that the two largest contributions to the fall in output came from civil engineering and commercial construction is troubling.”

“The latest construction PMI data is unlikely to provide any real comfort. Though this rebound is a welcome sign, the danger remains the sector could shrink again. The political situation in the UK and its attempt to navigate through trade deals this year could see construction businesses experiencing a see-saw of good and bad news in the coming months.”