Construction slowdown eases

5 January 2024

Data for December from the respected S&P Global UK Construction PMI index showed that although UK construction activity showed another fall, the rate of decline eased to the slowest since the current decline phase began last September.

A sustained slump in house building was the main factor holding back construction output, which survey respondents linked to high interest rates and subdued client confidence. 

Improving supply conditions continued in December, with delivery times for construction items shortening for the tenth month in a row. 

At 46.8 in December, the headline Index was below the neutral 50.0 mark for the fourth month running. However, this was up from 45.5 in November. House building remained the weakest-performing category of construction work (index at 41.1), despite the rate of decline easing to its slowest since July 2023. 

Civil  engineering activity (index at 47.0) also posted a softer pace of contraction at the end of last year. Commercial construction declined only modestly (index at 47.6), but the speed of the downturn accelerated to its fastest since January 2021. Some firms noted that concerns about the domestic economic outlook, alongside elevated borrowing costs, had led to greater caution among  clients. 

Total new work decreased at the slowest pace since August 2023. 

On a positive note, around 41% of the survey panel anticipate an increase in business activity over the course of 2024, while only 17% predict a decline. Hopes of reduced interest rates and a turnaround in market confidence were factors cited as likely to boost construction activity. 

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