The UK construction sector's growth decelerated to a six-month low in December, influenced by high borrowing costs and weak consumer confidence impacting new orders, according to survey data from S&P Global released on Tuesday.
The construction Purchasing Managers' Index stood at 53.3 for December, slightly down from November's 55.2. While this score was the lowest in the past six months, it remained above the crucial 50.0 mark, indicating a solid increase in construction output since March 2024.
In December, commercial activity led growth within the sector, with civil engineering following. However, both areas experienced a slowdown in growth when compared to November. Conversely, residential work continued to face contraction.
The survey highlighted that total new work grew at its slowest pace since last June, as improvements in tender opportunities in the commercial building sector were counterbalanced by reductions in residential development projects.
Reflecting the decline in orders, companies reduced their input buying in December, marking the first decrease in purchasing activity in eight months. Suppliers' delivery times remained stable. Notably, the usage of sub-contractors decreased for the fourth time in five months, while rates charged by sub-contractors saw their highest increase in 20 months.
Despite a robust rise in purchase prices only marginally softer than November's peak over the past year and a half, firms refrained from hiring new staff in an effort to manage rising costs.
Contractors' sentiment improved significantly from November, although it still lagged behind the levels seen in the first half of 2024. Many firms expressed concerns about reductions in capital expenditure and a pessimistic economic outlook.
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