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Coronavirus: 'Strong rebound' in UK construction but firms slash jobs

Tom Belger
Finance and policy reporter
The construction sector has begun to recover. Photo: Andrew Milligan/PA via AP

The UK construction sector has seen a “strong rebound” in activity as Britain’s economy emerges from the fallout of the coronavirus lockdown.

The bellwether survey of construction firm leaders showed the biggest expansion of activity in more than two years as building firm supply chains increasingly reopened after shutdowns.

The headline figure on a purchasing managers’ index (PMI) for the sector rose to 55.3 in June from 28.9 in May. Figures above 50 suggest most firms are growing and below 50 show decline on the index, based on a survey carried out by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS).

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Duncan Brock, group director at the CIPS, said: “Builders were the stars of the UK economy in June with the fastest rise in purchasing activity in almost five years, as pent-up building plans were unleashed following the easing of lockdown measures.”

Many building sites remained open throughout the pandemic, but many others shut down and orders, activity and supply chains took a significant hit when Britain went into lockdown. Two months ago the survey recorded its worst figures in the history of the index.

Now the majority of firms in the housebuilding, commercial and civil engineering sectors all report higher activity compared to the previous month. Residential construction saw the biggest reported jump in five years, with 46% of firms reporting higher workloads and only 27% reporting a decline.

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“Higher levels of business activity were overwhelmingly linked to the reopening of the UK construction supply chain following stoppages and business closures during the early stages of the coronavirus,” said the latest PMI report.

But employment numbers fell at the end of the second quarter, according to the latest data. “Employment levels remained deflated, with reports of redundancies, furloughed staff and a reluctance to boost staff numbers when new order levels remained so flat,” added Brock.

“There are still some potholes to navigate around as government support for jobs is stripped away,” he added. It marks the latest in a string of warnings over firms’ ability to sustain staff levels as UK government grants for furloughed workers are cut back.