UK: UK construction companies indicated a loss of momentum at the end of 2024 with business activity expanding at the slowest pace since last June.
The headline S&P Global UK Construction Purchasing Managers’ Index – a seasonally adjusted index tracking changes in total industry activity – registered 53.3 in December, down from 55.2 in November and the lowest for six months.
Residential was again the only construction category to register an overall decline in output during December (47.6). Housebuilding activity has now decreased for three consecutive months and the latest reduction was the fastest since June 2024. Survey respondents noted that subdued demand conditions, elevated borrowing costs and weak consumer confidence had all weighed on activity.
Josh Ward-Jones, director of Bloom Building Consultancy, said: “This is not the housebuilding boom the Government wants. Levels of housebuilding have now fallen for three months in a row and the contraction is getting worse, not better. December’s PMI survey found that housebuilders are being held back by the high cost of borrowing, weak consumer confidence and patchy demand from buyers. With the fundamentals of housebuilding seemingly stacked against them, many residential developers are holding fire and no amount of relaxation in the planning rules will get the new homes Britain needs built.”
“With residential stuck in reverse, progress across the construction industry as a whole has slowed, and the rate of expansion has slipped to its lowest level for six months. Yet there are some bright spots. Demand for commercial buildings remains strong, and some contractors report that this is offsetting the slump in residential demand and keeping their order books relatively full. Just under half of the construction firms surveyed remain upbeat about the prospects for 2025, even if sentiment has weakened noticeably since the first half of 2024. But behind the positive headline figures for the industry as whole, warning lights are coming on about the weakness of residential construction. Many housebuilders are proceeding with caution or not at all, and the Government’s promise to get 1.5 million more homes built in England over the next five years is going to be very hard to keep,” he added.
