Civil engineering remains weakest overall, even as expectations for the year ahead improve
Britain’s construction sector posted its worst performance since the global financial crisis at the end of the year, with housebuilding suffering its deepest decline since the COVID-19 lockdowns of 2020, according to new industry data.
The UK construction sector contracted for the 12th consecutive month in December, marking the longest unbroken run of declines since the 2007–09 financial crisis, data provider S&P Global said. The purchasing managers’ index from S&P Global rose slightly to 40.1 in December from November’s five-and-a-half-year low of 39.4. Any reading below 50 indicates contraction.
Housebuilding and commercial construction both fell at the fastest rate since May 2020, when coronavirus lockdowns forced building sites to close. The sharp declines underline the government’s struggle to meet its housebuilding targets. Civil engineering was the weakest-performing category overall in December, although the pace of decline there was slower than in November.
“UK construction companies once again reported challenging business conditions and falling workloads in December, but the speed of the downturn moderated from the five-and-a-half-year record seen in November,” Tim Moore, economics director at S&P Global Market Intelligence, said.
Survey evidence suggested fragile client confidence had weighed on workloads, while delayed investment decisions ahead of the November budget had hurt sales. “Many firms cited subdued demand and fragile client confidence. Despite a lifting of budget-related uncertainty, delayed spending decisions were still cited as contributing to weak sales pipelines at the close of the year,” Moore said.
The survey of purchasing managers at UK construction firms showed both activity and new orders fell again last month. Economists had forecast a slight improvement to 42.5, but the sector performed worse than expected, The Guardian reported.
However, business activity expectations for the year ahead rebounded to a five-month high, suggesting budget uncertainty has eased and offering some grounds for optimism among construction companies.
“Latest data indicated the fastest reductions in housing and commercial construction since May 2020, while civil engineering was the only segment to signal a slower pace of decline than in the previous month,” Moore said.
The prolonged downturn in the construction sector comes as the government has made boosting housing supply a central policy priority.
