UK construction output continued to grow in November, with commercial projects leading the way. The S&P Global UK Construction Purchasing Managers’ Index (PMI) rose slightly from 54.3 in October to 55.2, indicating solid expansion. This marked the ninth consecutive month of growth. Despite this overall positive trend, several challenges affected different sectors of the industry.
Commercial construction experienced the strongest rise in activity for over two years, driven by increased customer demand and new project opportunities. Civil engineering also showed strong growth, although at a slightly slower pace than before. However, house building remained the weakest sector, with its performance dipping to its lowest level since June. This decline was attributed to high borrowing costs and low consumer confidence.
New business volumes continued to increase across the sector, marking the tenth month of growth. However, the rate of new orders slowed, reaching its lowest point in five months. Many construction firms reported a drop in client confidence, partly due to uncertainty surrounding the Autumn Budget.
Job creation within the sector also slowed, with only a marginal increase in employment. Rising employment costs and a shift towards using subcontractors contributed to this slowdown. Additionally, purchasing activity grew at the slowest pace since May, and supplier performance worsened, mainly due to transportation issues and delays in international shipping.
The cost burden for construction firms also increased, with raw material prices and higher staff costs being the primary drivers. In terms of future expectations, optimism in the sector decreased significantly. Around 43% of firms anticipate increased business activity over the next year, but this sentiment is the lowest it has been in 13 months.
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