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Construction firms report further dip in activity

Published: 18/12/2023

Decreasing construction activity was evidenced for the third consecutive month in the latest update to the S&P Global/CIPS UK Construction Purchasing Managers’ Index.

The index, which tracks changes in the volume of business activity through a survey of around 150 construction firms, was 45.5 in November, the second lowest it has been since May 2020. 

Another sharp drop in residential building, expensive finance and slow demand for new housing work were cited as contributing factors. Housebuilding was said to be the weakest-performing sector, followed by civil engineering.  

Total new orders decreased for the fourth month running, though at the slowest pace since August, and input prices across construction were reported to have their steepest decrease since July 2009. 

BCIS Chief Data Officer Karl Horton said: ‘Monthly movement in the BCIS General Building Cost Index (GBCI), which tracks input costs, was down in August and September but up by 0.3% in the provisional data we have for October. Projects will be affected in different ways depending on their constituent parts and resources required, and labour has become the most significant cost-driver. Overall, annual growth in the GBCI has slowed considerably from where we were at the beginning of the year.’ 

‘Our latest price adjustment formulae indices show further decreases in materials’ costs. However, we are keeping an eye on price increases in fuel, which will affect project costs as supplies are impacted. The provisional PAFI 4/CE/28 Gas Oil (Diesel in Construction) index has been growing for five consecutive months, increasing by 17% since May.’  

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