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September 2017

What positives can be found in the UK construction data?

Published: Thursday 07 September 2017

By Rachael Kinsella

The latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) showed a slowdown in August, as overall construction activity only increased slightly and new business declined for the second month in a row. Increased economic uncertainty around Brexit and other global events and slowing investment were cited as the key reasons for the slowing of activity in the sector.
However, there were some positives to come from the latest results. Residential building has seen strong growth in August, at a faster pace than seen in previous months, and exceeding expectations. This helped soften the blow of almost stagnant civil engineering and commercial building activity slowing the most since last summer.
Cost pressures, which have been an ongoing issue for UK industry as a whole, were at the lowest level for 12 months in the UK construction sector. While poor exchange rates were a factor in increasing the price of materials, market and economic conditions have provided scope for pricing negotiations.
And while new order volumes fell for the second month in a row, they dropped at a slower pace than the dramatic fall last month.
These positives have done little to bolster sector sentiment, however, as the industry remains cautious in the face of economic and political uncertainties.
David Johnson, Founding Director at currency specialist, Halo Financial, commented, “Firms are prudently battening down the hatches in preparation for what may well prove to be tough times ahead. With exchange rates and economic uncertainty playing such a significant role in the slowdown in growth in the sector, construction businesses will undoubtedly look closely at their costs and assess any international exposure, identifying areas where they could potentially lose out to currency volatility.”
“Robust business plans and risk management strategies will be key to navigating the way forward, as ongoing uncertainty will continue to fuel the volatile markets. However, exchange rate volatility can be a boon to international business if harnessed correctly, and therein lies an opportunity not to be missed.”
Brendan Sharkey, Partner and Construction and Real Estate lead at accountants and business advisors, MHA MacIntyre Hudson, commented, “Construction clients are telling me they are experiencing less pressure on material prices and sub-contractors actually asking for work, which indicates there is capacity in the marketplace and is helpful. However, it looks as though Local Authorities are diverting budgets towards “Grenfell projects”, while other proposals are being shelved, which is disruptive to some, but beneficial to those with the relevant skills.

About Halo Financial

Halo Financial is a leading UK foreign exchange brokerage, offering a comprehensive range of services to individuals and businesses since its inception in 2005. The business prides itself on offering a flexible and personalised approach for each of its clients, simplifying the seemingly complex foreign exchange market to maximise savings in currency transactions, protect against currency risk and make money go further.

Staffed by qualified technical analysts, the company is authorised by the Financial Conduct Authority and HM Revenue and Customs.

“Excellent”, “Reliable”, “Professional”, “Knowledgeable”, and “Helpful”– just some of the great feedback received as a Gold Trusted Service Provider for Feefo.com. The team at Halo are proud that customers rate their services so highly and are happy to recommend to others. The company is always striving to provide the best possible service and to innovate services and products in line with customers’ ever-evolving needs.

Halo Financial won Best Customer Focus category in the 2016 Best Business Awards; received OPP Gold for Best Supporting Service; the Gold Award for Financial Support and Innovation from Relocate Magazine, Commendations in the 2016 and 2017 Moneyfacts Awards and has 5 out 5 Star Customer Gold Merchant Status via independent review website, Feefo.com, winning their Gold Trusted Service award. 

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news