UK construction PMI slips to contraction as new orders fall

(Alliance News) - Construction activity fell in December for the first time in over a year as new orders declined, data from S&P Global showed on Friday.

The construction purchasing managers' index fell to 48.4 in December, down from 50.4 in November.

Any number above 50.0 signals growth, while readings below demonstrate contraction.

December's reading ended a three-month sequence of growth, and represented the fastest rate of decline since May 2020. It was also the first contraction in construction sector output since last August.

The uplift in the commercial sector was outweighed by contractions across the residential and civil engineering sectors in December, said S&P Global analysts.

Housing activity declined for the first time since last July and only marginally at 48.0, while civil engineering saw a sixth consecutive monthly contraction in output at 46.8. The rate of decline remained sharp overall.

Notably, new orders fell overall, following a small uplift in November.

Survey respondents blamed weak client demand, linked to higher prices, S&P Global reported.

"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," said Lewis Cooper, economist at S&P Global Market Intelligence.

Meanwhile, the chief economist at the Chartered Institute of Procurement & Supply, John Glen, warned of bleak prospects in the new year.

"Optimism remained very flat and at one of the starkest rates in the survey's history. Builders were reining back on recruitment unconvinced there will be enough growth in the UK economy in 2023 to justify additional expenditure when margins remained so squeezed. Builders are fast running out of the resilient spirit maintained over the last couple of years as the blocks to success piled up and the winter of discontent with high inflation, strikes and shortages continues," Glen said.

By Holly Beveridge; Alliance News reporter

Comments and questions to [e-mail]

Copyright 2023 Alliance News Ltd. All Rights Reserved.