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The downturn in the UK construction sector eased slightly at the start of the year, survey data showed on Tuesday, with optimism reaching its highest level for two years.
The S&P Global UK construction purchasing managers’ index rose to 48.8 points in January from 46.8 points in December. This marks the highest reading since August 2023 and is higher than FXStreet market consensus of 47.3 points.
That said, the index remained below the crucial 50.0 no-change threshold for the fifth month running.
The decline in construction work was led by housebuilding, with the sub-index languishing at 44.2 points. ‘Survey respondents noted subdued demand conditions and a lack of work to replace completed projects. The rate of contraction for residential activity nonetheless eased to the least marked since March 2023,’ S&P said.
Looking ahead, S&P said that optimism has reached its highest level for two years.
S&P Global Market Intelligence economics director Tim Moore commented: ‘UK construction companies seem increasingly optimistic that the worst could be behind them soon as recession risks fade and interest rate cuts appear close on the horizon. The prospect of looser financial conditions and an improving economic backdrop meant that business activity expectations strengthened to the highest for two years in January. Moreover, there were again signs that customer demand is close to turning a corner as total new orders fell to the smallest extent for six months.’
The survey features a panel of around 150 construction firms in the UK. Responses were collected between January 11 and 30.
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