UK construction activity falls at fastest pace since May 2020
Activity in the UK construction sector fell in December at the fastest rate since May 2020, according to a survey released on Friday.
The S&P Global/CIPS construction purchasing managers’ index declined to 48.8 from 50.4 in November, coming in below the 50.0 mark that separates contraction from expansion for the first time since last August.
The survey showed that house building fell back into contraction for the first time since July, while civil engineering remained the weakest performer, with a sixth month of contraction.
Lewis Cooper, economist at S&P Global Market Intelligence, said: "The UK's construction sector registered a relatively poor finish to 2022, with business activity falling into decline following a three-month growth sequence amid the fastest contraction in new work since the initial pandemic period in May 2020. Companies cited weak client demand, driven partly by higher prices amid ongoing inflationary pressures.
"Commercial construction activity remained the only bright spot, though here the rate of growth came close to stalling, with the overall contraction led by a further sharp decline in civil engineering and the first fall in residential construction activity since last July."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The construction sector managed to keep its head above water through the autumn, but now is being dragged down by the recession in the wider economy and the surge in borrowing costs faced by households and businesses.
"Admittedly, the drop in activity in December, signalled by the PMI, might have partially reflected some builders downing tools during the week of heavy snow in mid-December. In addition, the slump in activity in the civil engineering sector - the activity index for this sector edged up merely to 46.8, from 46.7 in November - should draw to a close soon, given that public sector gross investment is set to rise in real terms by 9.3% in the 2023/24 fiscal year."