Output down for fourth successive month as housebuilding remains weak, according to S&P Global/CIPS UK index

Construction activity fell again in December but was the highest it has been for four months.

The latest S&P Global/CIPS UK Construction Purchasing Managers Index shows a score of 46.8 for construction activity in December. Any score below 50 in the seasonally-adjusted tracker indicates falling activity.

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December’s score was up on the 45.5 posted in November and was the highest for four months.

Housebuilding remained the weakest-performing sector with a score of 41.1, although its decline has eased to its slowest since July 2023.

Commercial construction declined more modestly, with a score of 47.6, dropping by its fastest rate for three years.

Total new work decreased at its slowest pace since August. Subdued customer demand across the house building sector was often cited as a factor leading to reduced order books.

The latest index results however suggest growing confidence in the industry.

A total of 41% of the panel of around 150 construction firms polled anticipate an increase in business activity in 2024, compared to 17% predicting a decline.

Responding to the latest figures, Fraser Johns, finance director at contractor Beard said “weak performance in the housebuilding sector” continues to “hold back” output.

He said: “A key driver has been elevated borrowing costs and general uncertainty in the economy, which is also being felt in the commercial space – contributing to a modest decline in the sector. It may be the case that clients don’t quite have the confidence just yet to commit to large-scale construction projects.

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“Saying that, our view on the ground in the south remains positive with high demand – particularly from frameworks, and growing interest on the south coast as we prepare to open our latest regional office.”

Brian Smith, head of cost management and commercial at Aecom, said the figures showed “another month of decline for a sector struggling for momentum, and positive signs are currently hard to come by. “

He said: ““With a general election on the horizon, firms across the sector will be hopeful of the wider economy gaining fresh impetus. For the time being though, it’s critical that supply chains work collaboratively to avoid the knock-on effects of individual contractors running into challenges.”