UK construction output has eased to a six-month low, as total new work rises at its slowest pace since June 2024.
Total business activity growth across the UK construction sector for December 2024 decreased, despite business optimism rebounding from the 13-month low seen in November.
The S&P Global UK Construction Purchasing Managers’ Index (PMI), which tracks changes in total industry activity, registered 53.3 in December, down from 55.2 in November.
Despite total business activity growth reaching its lowest for six months, the index remains above the 50.0 no-change threshold since March 2024 and the latest reading still signalled a solid upturn in overall construction output.
Commercial activity continues to be the fastest-growing area of the construction sector in December with 55.0, followed by civil engineering (52.9), despite a slowdown in the rate of business activity expansion since November.
Housebuilding was again the only category to register an overall decline in output during December with 47.6, down from 47.9 in November.
This is the third month in a row the housebuilding index (October 2024: 49.4), was inside negative territory and signalled the fastest rate of decline since June.
Subdued demand conditions, elevated borrowing costs and weak consumer confidence were cited as having weighed on activity.
Total new work also expanded at the slowest rate since last June.
Survey respondents suggested improving tender opportunities in the commercial building sector had been offset by cutbacks to residential development projects and a lack of new business to replace completed infrastructure work.
December data highlighted a decline in sub-contractor usage for the fourth time in the past five months, but sub-contractor availability improved only marginally and at the slowest pace since March 2023.
Looking ahead, around 48 per cent of the survey panel predict a rise in output over the course of 2025, while only 15 per cent forecast a decline.
The degree of positive sentiment picked up sharply since November, but it was still much weaker than seen in the first half of 2024.
Tim Moore, economics director at S&P Global Market Intelligence, said: “December data highlighted a loss of momentum for construction output growth, with all three main categories of activity posting weaker performances than in the previous month.
“The slowdown in overall construction output growth reflected more subdued demand conditions in recent months, as illustrated by a further moderation in new order growth during December. “Survey respondents commented on headwinds from elevated borrowing costs and the impact of fragile consumer confidence.
“Staff hiring picked up since November, but there were signs of tight supply conditions.
“Concerns about the demand outlook weighed on construction sector growth expectations for 2025.
“Although confidence recovered after a post-Budget slump during November, it was still much weaker than in the first half of 2024.
“Many firms reported worries about cutbacks to capital spending and gloomy projections for the UK economy.”
Jordan Smith, technical director at Thomas & Adamson, part of Egis Group, said: “The mixed set of indicators we saw in November’s PMI update continued into December, with activity moderating as 2024 came to an end.
“Housebuilding remains the laggard, which looks unlikely to change any time soon given the challenging backdrop in terms of interest rates and consumer confidence.
“That said, further detail around the government’s spending plans in the first half of this year could provide a boost to the sector in the not-too-distant future.
“Overall, while December’s figures are a mixed bag, there is still a good degree of optimism in the industry, and we have a significant amount of our 2025 workload secured as we move into the year ahead.”
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