Construction Suffers on Housebuilding Slump
The house building industry is struggling to pick up pace amid borrowing costs and subdued demand
Alliance News
6 December, 2023
The UK construction sector remained in the doldrums last month, amid continued weakness in housebuilding, a survey revealed on Wednesday.
The UK construction sector remained in the doldrums last month, amid continued weakness in housebuilding, a survey revealed on Wednesday.
The latest S&P Global/Chartered Institute of Procurement & Supply UK construction purchasing managers' index fell fractionally to 45.5 points in November, from 45.6 in October. Slipping further behind the 50.0 no change mark, the latest reading suggests the sector's decline picked up pace slightly.
According to the survey publisher S&P Global, November is the third consecutive month during which UK construction companies indicated a decline in business activity, led by another sharp fall in residential building. Elevated borrowing costs and subdued demand for new housing projects were widely cited as factors holding back construction activity.
“Latest survey data pointed to the steepest reduction in purchasing costs across the construction sector for more than 14 years. This was linked to lower raw material prices, alongside greater competition among suppliers in response to falling demand for construction inputs,” the company says.
Housebuilding was the worst-performing sub-sector “by far”. There was “resilience” in commercial building, though it remained in downturn territory and has been for three months on-the-trot.
The survey comes a week after the news that the pace of declining house prices in the UK is starting to slow.
Overall, new work was scarce last month. New orders fell for the fourth month running, though promisingly the pace of decline was the slowest since August.
S&P Global added: “Business activity expectations for the year ahead picked up from October's recent low, but remained notably weaker than seen in the first half of 2023. Concerns about the near-term demand outlook contributed to a renewed decline in staffing numbers during November and a marked reduction in purchasing activity.”
The survey features a panel of around 150 construction firms. Responses were collected between November 9 and 29.
According to the survey publisher S&P Global, November is the third consecutive month during which UK construction companies indicated a decline in business activity, led by another sharp fall in residential building. Elevated borrowing costs and subdued demand for new housing projects were widely cited as factors holding back construction activity.
“Latest survey data pointed to the steepest reduction in purchasing costs across the construction sector for more than 14 years. This was linked to lower raw material prices, alongside greater competition among suppliers in response to falling demand for construction inputs,” the company says.
Housebuilding was the worst-performing sub-sector “by far”. There was “resilience” in commercial building, though it remained in downturn territory and has been for three months on-the-trot.
The survey comes a week after the news that the pace of declining house prices in the UK is starting to slow.
Overall, new work was scarce last month. New orders fell for the fourth month running, though promisingly the pace of decline was the slowest since August.
S&P Global added: “Business activity expectations for the year ahead picked up from October's recent low, but remained notably weaker than seen in the first half of 2023. Concerns about the near-term demand outlook contributed to a renewed decline in staffing numbers during November and a marked reduction in purchasing activity.”
The survey features a panel of around 150 construction firms. Responses were collected between November 9 and 29.
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