Britain’s construction industry is its least optimistic for five years amid fears over Brexit and an economic slowdown, according to a survey.

Despite some pockets of strength as building firms won the most work for several months in December, the balance of companies expecting a rise in output levels over the next 12 months was the weakest recorded since mid-2013, according to the Markit/Cips UK construction PMI.

The gauge of sentiment among executives at 170 construction firms fell to 52.2 in December from 53.1 in November – worse than forecast by City economists, although remained above the 50 level indicating expansion.

The dip in the PMI reflected falling volumes of commercial work, offset by growing numbers of housebuilding projects. The prospect of greater workloads led firms to take on staff and buy materials at the fastest pace in two years over December.

Strength in the housebuilding sector is likely to please government ministers trying to fix the country’s housing crisis, after the Conservatives pledged to build 300,000 new homes a year in the budget. Philip Hammond, the chancellor, also ploughed an additional £10bn into the help-to-buy loan scheme and cut stamp duty for most first-time buyers.

Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics, said support from the government “should keep housebuilding motoring along” in 2018, although he warned construction output overall was likely to flatline.

The rebound in orders in December picked up by the PMI survey comes as optimism among building firms evaporates, fuelled by fears over Brexit and the potential for a slowdown in economic growth. Little more than a third of firms in the survey see an increase in activity over the course of 2018, while 11% anticipate a reduction.

Firms said they were facing strong cost pressures as a result of the weak pound in the wake of the Brexit vote driving up the cost of importing materials. The price of bricks, insulation and roofing tiles also increased.

Duncan Brock, of the Chartered Institute of Procurement and Supply, said: “It appears that the continued fall in commercial activity was testament to Brexit-related uncertainty on the horizon and the sector’s fear about the direction of the UK economy as clients still hesitated to spend on bigger projects.”



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