The UK’s construction industry continued to face challenges in December, with housing, commercial, and civil engineering activities all experiencing sharp declines, according to the latest data from S&P Global.
The construction sector’s Purchasing Managers’ Index (PMI) rose slightly to 40.1 in December, up from 39.4 in November, but remained firmly in contraction territory (a reading below 50 indicates a decline). This marked the 12th consecutive month of contraction, the longest unbroken run since the global financial crisis of 2007-09.
Housebuilding and commercial construction work both decreased at the fastest rate since May 2020, when the COVID-19 lockdown forced building sites to close. This highlights the government’s ongoing struggle to meet its housebuilding targets. Civil engineering was the weakest-performing category, though it did see a slower pace of decline compared to the previous month.
Tim Moore, economic director at S&P Global Market Intelligence, commented: “UK construction companies once again reported challenging business conditions and falling workloads in December, but the speed of the downturn moderated from the five-and-a-half-year record seen in November. Many firms cited subdued demand and fragile client confidence. Despite a lifting of Budget-related uncertainty, delayed spending decisions were still cited as contributing to weak sales pipelines at the close of the year.”
The data suggests that fragile confidence among clients has impacted workloads, and that delayed investment decisions ahead of the November Budget had also hurt sales. However, business activity expectations for the year ahead rebounded to a five-month high, indicating that the budget uncertainty has lifted.
The prolonged downturn in the construction sector is a concern, as the industry plays a crucial role in the UK’s economic growth and development. Policymakers will be closely monitoring the situation and may need to implement measures to support the sector and help it weather the current challenges.