Construction output has fallen for the first time in nearly a year due to a gloomy economic outlook and delayed decision-making on major projects.
Shrinking order books and rising cost pressures also contributed to a modest fall in activity recorded at the start of this year, ending a 10-month period of expansion.
At 48.1 in January, down from 53.3 in December, the S&P Global UK Construction Purchasing Managers’ Index (PMI) registered below the 50.0 “no-change threshold” for the first time since February last year.
As well as major project delays, house building in the residential sector fell for the fourth successive month.
Civil engineering activity was hampered by unusually wet weather, while commercial construction suffered a lack of tenders and new projects.
The rate of contraction by January was the steepest since November 2023.
Employment also fell for the first time since August last year, but only marginally.
Construction firms blamed a post-Budget dip in confidence among clients, alongside weakening sales pipelines, elevated borrowing costs and economic conditions.
“New orders decreased at the fastest pace since November 2023 amid many reports of delayed decision-making by clients,” said Tim Moore, economics director at S&P Global.
“Reduced workloads, combined with concerns about the general UK economic outlook, led to a dip in business activity expectations to the lowest for 15 months.
“Demand for construction items softened again in January, but purchase price inflation was the highest since April 2023 as suppliers sought to pass on rising energy, fuel and wage costs.”
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