November data pointed to a sharp and accelerated reduction in output levels across the construction sector amid widespread reports of challenging market conditions.
New orders also decreased to the greatest extent since May 2020. Many construction companies commented on weak client confidence, alongside delayed spending decisions linked to uncertainty ahead of the Budget.
At 39.4 in November, down from 44.1 in October, the headline S&P Global UK Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index tracking changes in total industry activity – was the lowest since May 2020.
Lower volumes of construction output have now been recorded for eleven months in a row.
Sub-sector data showed that housing activity (index at 35.4), commercial construction (43.8) and civil engineering (30.0) all experienced the fastest downturns in activity for five-and-a- half years. Survey respondents commented on fragile market confidence, delays with the release of new projects and a general lack of incoming new work.
Total new business decreased at a rapid pace in November. Around 44% of the survey panel reported a fall in new orders, while only 17% signalled an increase. Aside from the pandemic, the resulting seasonally adjusted New Orders Index pointed to the fastest downturn in new work since early-2009.
Construction companies commented on sales headwinds due to risk aversion among clients, worries about the UK economic outlook and elevated business uncertainty ahead of the Budget.
Tim Moore, Economics Director at S&P Global Market Intelligence, said: "November data revealed a sharp retrenchment across the UK construction sector as weak client confidence and a shortfall of new project starts again weighed on activity.
"Total industry activity decreased to the greatest extent for five-and-a-half years, led by steep falls in infrastructure and residential building work. Commercial construction also faced severe headwinds during November as business uncertainty in the run up to the Budget pushed clients to defer investment decisions.
"Lower workloads, alongside pressure on margins from rising wages and purchasing costs, continued to dampen staff hiring in November. The latest round of job cuts was the most marked since August 2020.
"Construction companies also signalled a slide in business activity expectations for the year ahead as hopes of an imminent rebound in sales pipelines faded in November. The degree of optimism dropped to its lowest since December 2022 amid reports of cutbacks to client budgets and pervasive worries about long-term UK economic growth prospects."
