UK Construction Sector Contracts For First Time In 11 Months

(RTTNews) - The UK construction sector shrank in January, ending a 10-month period of expansion due to shrinking orders and rising cost pressures, survey results from S&P Global showed on Thursday.

The construction Purchasing Managers' Index rose to 48.1 in January from 53.3 in December. The index registered below the 50.0 threshold for the first time since February 2024.

Respondents said delayed decision-making by clients on major projects and general economic uncertainty weighed on business activity.

"UK construction output fell for the first time in nearly a year as gloomy economic prospects, elevated borrowing costs and weak client confidence resulted in subdued workloads," S&P Global Market Intelligence Economics Director Tim Moore said.

House building decreased the most since January 2024. Meanwhile, civil engineering declined at a relative sharp pace, partly due to unusually wet weather. Output in the commercial construction also returned to contraction in January.

Incoming new work dropped for the first time in twelve months and at the steepest pace since November 2023. A lack of confidence and worries about the economic outlook contributed to fewer sales enquiries.

Reflecting weak orders and a lack of new work, purchasing activity dropped for the second straight month.

On the price front, the survey showed that input costs showed its steepest rise in prices since April 2023. Sub-contractor charges increased at a faster pace, with the rate of inflation hitting a 21-month high.

Employment decreased for the first time since August 2024 but the rate of decline was marginal.

Business optimism was the lowest since October 2023. Respondents cited a post-Budget fall in sentiment among clients, alongside weakening sales pipelines and the impact of lackluster domestic economic conditions.