Pace of growth slows across UK construction sector - PMI
Growth across the UK’s construction sector slowed as 2024 came to an end, a closely-watched survey showed on Tuesday, dragged lower by house building.
The latest S&P Global UK construction purchasing managers' index came in at 53.3 in December, above the neutral 50.0 benchmark.
A reading above 50.0 indicates growth, while one below it suggests contraction.
However, December’s print was down on November’s 55.2. Analysts had forecast a fall, but most had pencilled in a smaller drop, to 54.4.
Respondents said subdued demand, higher borrowing costs and weak consumer confidence had weighed on activity during December.
Within individual sub-sectors, the PMIs for commercial activity and civil engineering were 55.0 and 52.9 respectively, although both saw a slowdown when compared to November’s robust performance.
However, the biggest drag was residential work. It remained in overall decline, at 47.6, marginally down on November’s 47.9.
Tim Moore, economics director at S&P Global Market Intelligence, said there had been a "loss of momentum" across the sector.
He continued: "The slowdown in overall construction output growth reflected more subdued demand conditions in recent months, as illustrated by a further moderation in new order growth during December.
"Survey respondents commented on headwinds from elevated borrowing costs and the impact of fragile consumer confidence."
Looking to 2025, around 48% of respondents said output would likely rise during the year, with just 15% expecting a decline.
However, Moore noted: "Although confidence recovered after a post-Budget slump during November, it was still much weaker than in the first half of 2024.
"Many firms reported worries about cut backs to capital spending and gloomy projections for the UK economy."
Matt Swannell, chief economic advisor to the EY Item Club, said: “The decline in activity takes the survey balance to th lowest in six months, but nonetheless still marks a decent pace of expansion.
“More broadly, GDP growth was flat in the third quarter and has made a soft start to the fourth. But turning to 2025, there are grounds to believe that the recent soft patch in the UK growth data is a blip, rather than a protracted growth slowdown.
“Consumer spending has performed well recently, and with scope for lower levels of consumer caution over 2025, there is room for consumer demand to play a greater role in supporting UK growth this year.”
The survey was carried out between 5 and 20 December. Questionnaires were sent to a panel of around 150 construction companies.