UK construction activity fall the slowest in three months in September

The decline in UK construction output slowed in September but business confidence remained weak amid caution ahead of November's autumn budget, data published by S&P Global showed Monday.

The headline S&P Global UK construction purchasing managers' index rose to 46.2 points in September from 45.5 in August, and beat the FXStreet-cited consensus of 46.1. Climbing towards the neutral 50-point mark separating growth from contraction, it indicates the pace of decline decelerated in September. It was the slowest pace of contraction in three months, S&P Global noted.

There was a slower reduction in new work but construction companies were still cautious about the outlook, with business optimism barely changed from August's 32-month low.

A lack of new project starts was again the main factor holding back construction output, S&P said, adding that: "Survey respondents often noted that subdued demand, elevated business uncertainty and general hesitancy among clients had made it difficult to convert sales opportunities. Some firms nonetheless commented on new business wins related to energy projects."

Tim Moore, economics director at S&P Global Market Intelligence, said: "Business activity expectations for the year ahead were among the lowest since the end of 2022, suggesting that construction companies remained cautious about the near-term outlook and have yet to see a turning point on the horizon. Some firms hope for a boost from lower borrowing costs and noted new sales pipelines in areas such as energy security markets and infrastructure projects. However, many survey respondents reported caution among clients ahead of the autumn budget and a general reluctance to commit to major capital expenditure projects against a subdued domestic economic backdrop.

"Weak business optimism, shrinking workloads and robust cost pressures once again led to lower employment numbers across the construction sector. Lower staffing levels have now been recorded for nine months in a row, which is the longest period of job shedding since the pandemic."

The construction PMI features a panel of 150 companies in the UK, with responses collected between September 11 and 29.