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The UK construction sector fell back into contraction last month, survey data revealed on Thursday, with a decline seen across all three major segments.
The S&P Global/Chartered Institute of Procurement & Supply construction purchasing managers’ index fell to 45.0 points, down sharply from 50.8 in August.
Crossing over the 50-point no-change mark, it shows the sector saw a downturn in activity from the prior month.
September saw the steepest decline in construction output since May 2020. The PMI reading was also markedly lower than FXStreet-cited market consensus of 49.9.
All three segments within the sector saw a decline in activity, led by a sharper fall in housebuilding.
‘Shrinking order books contributed to another slowdown in employment growth and lower business activity expectations for the year ahead. Moreover, falling workloads led to the fastest rise in sub-contractor availability since July 2009,’ S&P Global said.
Residential work’s sub-index slumped to 38.1. Aside from the pandemic, it was the steepest fall in activity since April 2009. Survey respondents cited on cutbacks to house building projects in light of elevated borrowing costs and weak demand.
Civil engineering contracted, with the sub-index reading at 45.7. Commercial building was somewhat more resilient, declining at a more modest pace of 47.7. However, S&P Global noted this was a significant change from the solid growth witnessed over the summer. It was also the fastest pace of decline since January 2021.
In response to the weak demand conditions, construction firms slowed the pace of job creation. Sub-contractor usage also fell for the first time since January. The lack of new projects saw sub-contractor availability rise at the fastest pace in over 14 years.
‘The survey’s forward-looking measures once again remained relatively downbeat as order books decreased at an accelerated pace and business activity expectations eased to the lowest so far this year. Moreover, fewer project starts meant that sub-contractor availability increased to the greatest extent since the summer of 2009,’ said Tim Moore, S&P Global Market Intelligence economics director.
The UK construction PMI is compiled from responses to surveys sent to around 150 construction companies, with responses collected in the second half of each month.
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