The headline S&P Global UK Construction Purchasing Managers’ Index (PMI) registered below the neutral 50.0 threshold, and the latest reading (44.6) was the lowest for nearly five years, signalling a steep decline in total construction activity.
Residential building decreased for the fifth month in a row and was the weakest-performing area of construction activity in February. Aside from the pandemic, the rate of decline was the fastest since early-2009.
Survey respondents often cited weak demand conditions, headwinds from elevated borrowing costs and a lack of new work to replace completed projects.
February data pointed to worsening demand conditions across the construction sector. New order intakes decreased sharply and to the greatest extent since May 2020. Survey respondents noted delayed decision-making among clients, reflecting squeezed budgets and concerns about the economic outlook. Some firms also noted the impact of cutbacks to business investment spending plans.
Business activity expectations meanwhile remained positive overall in February, despite a steep decline in order books and concerns about a lack of new tender opportunities.
Hopes of an improvement in underlying market conditions and lower borrowing costs helped to support confidence.
Brian Berry, chief executive of the FMB, said: “With new work down sharply, particularly in the house building segment, the government needs to take urgent action to reassure builders and consumers if they are serious about meeting their targets. Urgent steps are needed to diversify the housing market, and give SME builders the opportunity to step up and build the homes on the smaller sites which the major volume housebuilders can’t reach.”