According to the report from S&P Global/CIPS, the pace of contraction in the UK construction sector accelerated in January and was the sharpest since May 2020, due to weaker client demand and fewer new projects launched in recent months. However, business expectations for the coming year have risen significantly, hitting a 6-month high.
UK construction PMI fell in January to 48.4 points from 48.8 points in December. Consensus estimates suggested a decline to 48.5 points. The index remains below 50 points, which indicates a reduction in activity, for the 2nd month in a row.
The data also showed that activity in the housing construction sector contracted at the sharpest pace since May 2020 amid rising borrowing costs, unfavorable market conditions and more cautious customers. Meanwhile, activity in the commercial construction sector contracted for the first time in 5 months, reflecting a decline in demand and a delay in decision-making on new projects. Meanwhile, civil engineering activity (49.7) was close to stabilization, with the latest reading the highest seen since June 2022. Total new orders in the construction sector declined for the third time in the last four months, albeit at a modest pace, while the number of jobs declined for the second month in a row. The rate of job shedding was the fastest for two years. As for the prospects, about 43% of respondents expect business activity to grow in the coming year, and only 17% predict a decline. The resulting index signaled a sharp recovery in business expectations compared to the 31-month low seen in December 2022.