Data released by S&P Global / CIPS showed that activity in the construction sector contracted again in February, while the pace of contraction accelerated sharply. New work and input buying fell at the fastest pace for almost five years, while input cost inflation accelerated to the highest level since March 2023.
UK construction PMI fell to 44.6 points from 48.1 points in January. Economists had expected an increase to 49.5 points. An index value below 50 points indicates a reduction in activity in the sector.
The report showed that all three categories of construction recorded a reduction in activity in February. Residential building (index at 39.3) decreased for the fifth month in a row and was the weakest-performing area of construction activity in February. Civil engineering activity (39.5, the lowest since October 2020) also registered a steep decline in February. Commercial construction (49.0) displayed a degree of resilience, with output levels falling only marginally and at a similar pace to that seen in the previous survey period.
New orders in the construction sector fell again in February, with the rate of contract being the steepest since May 2020. Meanwhile, employment also declined, with the pace of job shedding being the sharpest recorded since November 2020. As for the inflationary situation, data indicated the fastest rise in average cost burdens for nearly two years. Around 38% of the survey panel indicated a rise in their input prices, while only 3% noted a reduction. Higher prices paid for raw materials, energy, transportation and wages were reported. Business activity expectations remained positive overall in February, despite a steep decline in order books and concerns about a lack of new tender opportunities.