Latest construction activity from firms survey

S&P Global report shows longest period of continuous decline since the global financial crisis

UK construction activity declined for the tenth consecutive month in October, and at the fastest rate since the pandemic, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI)⁽¹⁾.

The PMI, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, registered 44.1 in October, down from 46.2 in September. Anything above 50 signifies an overall increase in activity; anything below 50 represents a decrease.

Low activity was attributed to a sustained downturn in new work, sluggish market conditions, fewer tender opportunities and delays with the release of new projects. There were also reports that elevated political and economic uncertainty had discouraged client spending.

Dr David Crosthwaite, BCIS chief economist, said: ‘The latest data from S&P is very concerning, but perhaps not surprising given the economic malaise the country finds itself in. Of particular note was the decline in new project starts once projects had completed.

‘The government must take urgent action to try to stimulate investment in construction. Tinkering around the edges with legislative changes is simply not enough.’

At a sector level, civil engineering was again the weakest-performing, with respondents citing a lack of new work to replace completed projects.

Commercial activity was largely unchanged since September, though still in decline, while the residential sector saw the most significant reduction in activity for eight months.

There was also a marked reduction in employment numbers across construction, with higher payroll costs cited as a contributor to reduced headcounts.

S&P Global also reported:

• 34% of respondents were expecting a rise in output during the year ahead, while 20% predicted a decrease
• Fragile investor confidence and cutbacks to clients’ capital spending budgets are weighing on business optimism
• Competitive pricing strategies by suppliers in response to subdued demand had helped to bring down the overall pace of purchasing price inflation
• Shortening delivery times for the third month running
• Some staff shortages at construction companies affecting delivery times
• Decreased subcontractor usage and increased subcontractor charges

To keep up to date with the latest industry news and insights from BCIS register for our newsletter here.

^{(1) S&P Global UK Construction PMI  - here}