Latest construction activity from firms survey

Construction activity nosedived in November, S&P Global report finds

UK construction activity declined for the eleventh consecutive month in November, 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 39.4 in November, down from 44.1 in October. Anything above 50 signifies an overall increase in activity; anything below 50 represents a decrease.

Steep reductions in activity were recorded across the housing, commercial and civil engineering sectors, with all three experiencing the fastest downturns in five-and-a-half years.

Dr David Crosthwaite, BCIS chief economist, said: ‘If the latest construction PMI isn’t setting off alarm bells in Parliament, something’s seriously amiss. The steepest downturn in UK construction activity in five-and-a-half years, including eleven consecutive months of decline this year, is no fluke. It mirrors an industry battling low client confidence, stifled demand and skills bottlenecks compounded by a limited financial ability to recruit.

‘According to insight from the latest BCIS All-in Tender Price Index Panel, sentiment surveys are often a temperature check of construction’s SMEs where government data is more reflective of larger contractor outputs. If that’s the case, the latest PMI suggests current government actions are not enough and still failing the near-900,000 SMEs in construction. Increasing the cost of doing business in the Budget now feels even more like a step in the wrong direction.’

Poor activity was attributed to a decline in new orders, which decreased to the greatest extent since May 2020.

Survey respondents outlined a difficult combination of weak client confidence and delayed spending decisions due to pre-Budget uncertainty.

Employment numbers also reportedly fell for the eleventh month running and saw the steepest fall since August 2020 in November.

This was put down to increased wage pressures and the lack of new work to replace completed projects. Subcontractor usage has now fallen every month for almost one year too.

S&P Global also reported:

• 31% of respondents expect a rise in business activity in the next 12 months; 25% predict a decline
• Buying activity fell at the steepest pace in five-and-a-half-years
• Optimism reached the lowest degree since December 2022
• Supplier performance improved to the greatest extent since June 2024
• Supply chain pressures have been alleviated by a softening in demand for construction products and materials
• Copper products, electrical components and insulation are commanding higher prices

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