Rebound in construction sector slows to a trickle in worst month since August
Construction companies have reported what appears to be their worst month since August as a temporary rebound for the sector slowed down.
Activity among the UK’s housebuilders stalled in November, and the sector as a whole only just managed to grow thanks to a stronger performance for the commercial building sector.
The influential S&P Global/CIPS UK Construction PMI survey scored the construction sector just 50.4 last month, its worst score since August.
The sector looked to be growing healthily in October with a score of 53.2 – anything above 50 is considered to show growth among construction businesses.
Analysts were expecting the growth to slow down in November, but only to 52, according to an average of estimates supplied by Pantheon Macroeconomics.
The survey score had fallen to a 26-month low of 48.9 in July.
“Stalling housebuilding activity contributed to the weakest UK construction sector performance for three months in November,” said Tim Moore, economics director at S&P Global Market Intelligence.
“Survey respondents noted that new residential building projects had been curtailed in response to rising interest rates, cancelled sales and worries about the economic outlook.”
The businesses questioned in the wide-ranging survey reported that their costs had risen sharply in November. They said high energy prices, low supplies of key materials, and general inflation were to blame.
But cost pressures are still much lower than they have been at any point since January 2021, the survey found, as the prices of commodities relaxed somewhat.
Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply (CIPS) said: “The small uplift in activity in November did little to dispel builders’ fears about the future as optimism fell to the same level as December 2008 during the last recession and to one of the same lows seen during the pandemic.”
He added: “This gloomy view was fuelled in part by continuing shortages of key materials such as steel and timber along with skilled labour, affecting job hires, which rose at the slowest pace since February 2021.
“As new order growth remained below the 2022 average to date, builders were becoming hesitant about hiring too many labourers and there was some mention of shedding jobs over fears of the strength of the economy in 2023.
“Overall, it was civil engineering that remained steadfastly stuck in the mud, with the fastest fall in activity since August.”