UK construction growth slows to 6-month low, PMI shows
2025.01.07 05:11
By David Milliken
LONDON (Reuters) – Activity in Britain’s construction industry grew at the slowest pace in six months in December, dented by a further fall in house-building, a survey showed on Tuesday.
The S&P Global Purchasing Managers’ Index for the construction sector dropped to 53.3 in December from November’s 55.2, its lowest since June and below all forecasts in a Reuters poll of economists.
S&P’s UK all-sector PMI, which includes previously released services and manufacturing PMI data for December, fell to a 13-month low of 50.6 from 50.9 in November, just above the 50 mark that divides growth from contraction.
Builders said they faced headwinds from high interest rates and fragile consumer confidence.
“Although confidence recovered after a post-Budget slump during November, it was still much weaker than in the first half of 2024. Many firms reported worries about cutbacks to capital spending and gloomy projections for the UK economy,” S&P economics director Tim Moore said.
Britain’s economy lost momentum in the second half of 2024, partly because of large-scale tax rises in the new Labour government’s first budget on Oct. 30.
However, sticky inflation means financial markets expect the Bank of England to cut interest rates by only half a percentage point this year, to 4.25% from 4.75% currently.
Property purchase taxes will rise for some buyers from April, and employers face a big increase in social security payments which some have said will lead to reduced investment.
Expectations for future construction output were higher than in November but still their second weakest of 2024.
A rise in the number of tenders for commercial construction work had not been enough to offset a fall in housing projects and a lack of new infrastructure work, S&P said.
