UK construction growth slows as housebuilding declines

6th Nov 2024 09:40

(Sharecast News) - Activity in the UK construction sector expanded for the eighth straight month in October, though growth eased from a two-year high as uncertainty delayed spending decisions ahead of the Autumn Budget.

The construction-sector purchasing managers' index, released monthly by the Chartered Institute of Procurement & Supply (CIPS) and S&P Global, fell to 54.3 last month from 57.2 in September - its highest rate of growth since April 2022.

The sector has been growing since March - indicated by any reading above 50 - but October's reading was well below the consensus estimate of 56.0.

Overall new work increased at a "solid pace" during the month, according to S&P Global, though political uncertainty and subdued household demand due to cost-of-living pressures were said to have kept a lid on growth.

Civil engineering was the best-performing category of construction output in October with a PMI of 56.2, helped by energy infrastructure projects, especially within the renewables sector.

Commercial work (52.8) also increased, but housebuilding (49.4) was the only broad category to see an overall decline, with firms cited "elevated borrowing costs and uncertainty ahead of the Autumn Budget". October saw the first decline in residential construction activity since June.

"Total new work expanded at a solid pace in October, adding to signs of a robust improvement in order book pipelines across the construction sector in the second half of 2024. As a result, construction companies added to their payroll numbers at an accelerated pace," said Tim Moore, economists director at S&P Global Market Intelligence.

"However, business optimism remained relatively subdued in comparison to the highs in the first half of the year, with output growth expectations now the lowest since December 2023."