S&P Global/CIPS report says falling demand, high interest rates and election will keep lid on demand
Output has fallen for the third successive month a bellwether index has said with economists adding to the gloom after warning of no immediate uptick in the coming months.
The S&P Global/CIPS UK construction Purchasing Managers’ Index (PMI) said the figure for November was 45.5, down from 45.6 the month before, and below the 50 no change mark for the third month running
All sectors were below 50 - meaning output has declined - with housebuilding’s woes underlined by a low score of 39.1 for November – although this was an improvement in the 38.5 recorded in October.
Civil engineering remained stuck at 43.5 while commercial work was also below the 50 threshold at 48.1
CIPS chief economist John Glen said: “There will be no quick fixes next year for the sector. Lower demand, elevated interest rates and the prospect of an election promise an uncertain start to 2024. This is a challenging moment for suppliers.”
Brendan Sharkey, construction and real Estate Specialist at auditor MHA, said: ”“Pipelines are looking good on paper, particularly for the second half of the year, but with the economy the way it is, and interest rates are set to continue as they are, will these projects get deferred? The lack of announcements on housing or infrastructure in the Autumn Statement has not helped sector sentiment
“Housing is going to be a big issue in the upcoming election campaign, and there’s going to be an element of mothballing until then, so the industry is going to have to second guess what the government is going to do. Housebuilders will not build if there is no market.”
The PMI survey said employment fell for the first time in 10 months but materials prices fell at their fastest rate since July 2009.