The October S&P Global / CIPS UK Construction PMI has indicated that the latest decline in input costs was the steepest since August 2009, and reduced workloads have led to a decline in subcontractor charges for the first time in over three years
In October, business activity fell for the second month running amid a lack of new work to replace completed projects.
Fragile client confidence and elevated borrowing costs were often cited for weaker sales. Improving supply conditions and falling demand also contributed to a renewed decline in purchasing prices.
Housebuilding decreased for the 11th successive month
House building decreased for the eleventh successive month in October at a much steeper pace than elsewhere in the construction sector.
Falling work on residential construction projects was widely linked to a lack of demand and subsequent cutbacks to new projects.
Civil engineering activity also decreased sharply in October, and the rate of decline was the fastest since July 2022.
In the commercial sector, there were signs of stabilisation in the building segment, with activity falling only marginally and at a slower pace than in September.
Total new work fell for the third month running in October, and the rate of contraction was the joint-sharpest since May 2020.
Concerns over shrinking pipelines of work led to low business confidence
Around 37% of the survey panel forecast a rise in business activity during the year
ahead, while 19% predict a decline. The degree of optimism signalled by the survey in October was the lowest this year.
Softer demand for construction products and materials resulted in pressure on suppliers for price discounts.
The latest survey indicated that overall purchasing prices decreased at the fastest pace for over 14 years as vendors passed on lower timber, steel and transportation costs.
Fall in housebuilding is contributing to overall construction activity
Commenting on the latest UK construction output figures, Fraser Johns, finance director at Beard Construction, said: “Despite a stabilisation of commercial building, the headlines will be the eleventh straight monthly fall in housebuilding, which is having a major impact in skewing overall activity and the wider industry picture.
“Despite the positive news of the Bank of England holding rates, elevated borrowing costs and tighter access to credit remains a clear challenge. This is not unique to the residential space either and partnered with wider economic uncertainty may be causing some clients to hesitate when committing to new projects.”
