Britain’s construction sector has recorded its steepest fall in output for five and a half years, with November’s activity plunging to levels last seen at the height of the pandemic, according to the latest S&P Global UK Construction PMI.
The headline index fell to 39.4 in November, down sharply from 44.1 in October and well below the 50 threshold that separates growth from contraction.
The reading marks the eleventh consecutive monthly decline in activity and the weakest performance since May 2020, underscoring the severity of the slowdown gripping the industry.
All three major construction sub-sectors deteriorated at the fastest pace since the early months of the pandemic.
DEEP CONTRACTION
Housing activity registered 35.4, commercial construction 43.8 and civil engineering just 30.0 – signalling an especially deep contraction in infrastructure work. Survey respondents pointed to fragile client sentiment, delayed project starts and a shortage of new work.
New orders fell at their fastest rate since May 2020, with 44% of companies reporting a drop in incoming business.
Excluding the pandemic period, the decline was the steepest since early 2009. Firms cited clients’ risk aversion, concerns about the broader economic outlook and the decision by many to pause spending ahead of the Budget.
FALLING EMPLOYMENT
The slowdown is feeding directly through to the labour market. Employment in the sector fell for an eleventh consecutive month, with the rate of job losses the highest since August 2020.
Companies reported releasing staff as project pipelines thinned and wage pressures squeezed margins. Subcontractor usage also declined for the eleventh month in a row.
One of the few areas of improvement was supplier performance, which strengthened at the fastest pace since June 2024 as weaker demand eased pressure on supply chains.
STEEP RESIDENTIAL FALLS
Tim Moore, economics director at S&P Global Market Intelligence, said: “November data revealed a sharp retrenchment across the UK construction sector as weak client confidence and a shortfall of new project starts again weighed on activity.
“Total industry activity decreased to the greatest extent for five-and-a-half years, led by steep falls in infrastructure and residential building work.
“Commercial construction also faced severe headwinds during November as business uncertainty in the run up to the Budget pushed clients to defer investment decisions.”
MARGIN PRESSURE
He added: “Lower workloads, alongside pressure on margins from rising wages and purchasing costs, continued to dampen staff hiring in November. The latest round of job cuts was the most marked since August 2020.
“Construction companies also signalled a slide in business activity expectations for the year ahead as hopes of an imminent rebound in sales pipelines faded.
“The degree of optimism dropped to its lowest since December 2022 amid reports of cutbacks to client budgets and pervasive worries about long-term UK economic growth prospects.”
BLEAK HOUSE
Richard Pike, chief sales and marketing officer at Phoebus Software, said: “The latest housebuilding figures paint a bleak picture, with the fastest downturn in housing activity since the start of the pandemic.
“The uncertainty caused by the Budget speculation over the past few months has hit confidence hard and delayed decisions and shows the real-world impact of the Government’s prevarications.
NOT BUILDING ENOUGH HOMES
He added: “Underlying this however, there are some fundamental issues that the Government needs to address. We’re simply not building enough homes in the UK, which is driving up prices and creating affordability issues.
“While rising material costs and labour shortages are clearly factors, too many developers are land banking, watching values increase rather than getting on with development.
“I would like to see planning laws changed to make developers bound by timescales, rather than being able to sit on land and property indefinitely.”
