Housebuilding weighs as UK construction output falls again

Output in the UK construction sector fell again in October, weighed down by weakness in housebuilding, according to a survey released on Monday.

The S&P Global/CIPS construction purchasing managers’ index ticked up to 45.6 from 45.0 in September, but remained well below the 50.0 mark that separates contraction from expansion.

This was still well below the 50.0 mark that separates contraction from expansion, below consensus expectations of 46.0 and marked the second-lowest reading since May 2020.

The survey showed that housebuilding fell for the 11th month in a row and at a much steeper pace than elsewhere in the construction sector, with the index printing at 38.5. This was attributed to a lack of demand and subsequent cutbacks to new projects.

Meanwhile, output in the civil engineering sector also fell sharply, with the index printing at 43.7 in October, and the rate of decline the fastest since July 2022.

There were signs of stabilisation in the commercial building segment, however, with activity falling only marginally and at a slower pace than in September.

Tim Moore, economics director at S&P Global Market Intelligence, said the data highlighted "another solid reduction in UK construction output as elevated borrowing costs and a wait-and-see approach to new projects weighed on activity".

"Total new work continued to fall more quickly than at any time since the initial pandemic lockdown period, which contributed to shrinking demand for construction products and materials during October. Competitive pressure on suppliers to pass on lower commodity prices resulted in the fastest decline in input costs since August 2009. Sub-contractors meanwhile cut their charges for the first time in more than three years in response to a further downturn in workloads during October."