The UK construction sector experienced its fastest downturn since May 2020, according to the latest S&P Global UK Construction Purchasing Managers' Index (PMI).
The index fell to 44.6 in February, down from 48.1 in January, marking the second consecutive month below the neutral 50.0 threshold. This decline reflects a significant drop in construction activity, particularly in residential and civil engineering sectors.
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Residential : The residential sector saw its fifth consecutive monthly decline, with an index of 39.3, marking the fastest rate of decline since early 2009, excluding the pandemic period.
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Civil Engineeering: Civil engineering activity also fell sharply, with an index of 39.5, the lowest since October 2020.
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Commercial: Commercial construction showed some resilience, with output levels falling only marginally.
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New Orders & Employment: New order intakes decreased sharply, leading to reduced employment and input buying.
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Inflationary Pressures: Input cost inflation accelerated to its highest level since March 2023, driven by higher raw material, energy, and wage costs.
Tim Moore, Economics Director at S&P Global Market Intelligence, highlighted that weak demand conditions and client caution are driving the downturn. He noted that the decline in order books has led to reduced output, employment, and input buying. Despite these challenges, construction companies remain optimistic about future growth prospects, though less so than in 2024 due to economic concerns.
Conclusion
The UK construction sector faces significant challenges, with steep declines in residential and civil engineering sectors. While commercial construction shows some resilience, the overall outlook is clouded by weak demand and rising costs. Despite these challenges, there is still optimism about future growth, though it is tempered by broader economic uncertainties.
