Construction output stayed in red for whole of last year, latest bellwether index confirms

Construction output stayed in negative territory for the whole of last year, the latest S&P Global UK Construction Purchasing Managers’ Index has confirmed.

Although last month’s figure was up to 40.1, from November’s score of 39.4, itself the lowest number since May 2020, the figure meant that the index remained below the key 50 number where growth is registered.

Civil engineering was the weakest-performing category last month with a score of 32.9, although this was up from 30, while housing activity (33.5) and commercial construction (42) stayed well in the red.

The survey said: “Anecdotal evidence suggested that fragile confidence among clients and subdued underlying demand had resulted in lower workloads at the end of the year. Many firms also noted that delayed investment decisions ahead of the Budget in November had weighed on their sales pipelines.”

And Tim Moore, economics director at S&P Global Market Intelligence, said: “Many firms cited subdued demand and fragile client confidence. Despite a lifting of Budget-related uncertainty, delayed spending decisions were still cited as contributing to weak sales pipelines at the close of the year.”

But there were signs of optimism in the latest figures with around 37% of the survey panel predict a rise in output levels during the year ahead, compared to 20% that forecast a decline – the highest level of business confidence for five months.

And Aecom’s head of cost management Brian Smith said: “Things are starting to improve for contractors and January will all be about positioning themselves to gradually expand capacity and be on the front foot to win new work when it comes.

“Everything points towards a further slowdown in inflation and cuts in interest rates to match this year, which will embolden clients and developers to kickstart schemes left on the back burner.”