UK construction orders slump at the sharpest pace in three years
UK CONSTRUCTION companies suffered the biggest plunge in new orders in more than three years after a prolonged slump in housebuilding weighed heavily on the sector.
S&P Global’s construction purchasing managers’ index slipped to 50.8 in August from 51.7 the month before, signalling that the industry is close to stagnation. However, the reading was still stronger than the 49.8 expected by economists, which would have indicated a contraction.
The sharp decline in orders points to a gloomier outlook for construction companies as higher interest rates, a struggling property market and weak economy slow investment in new projects.
“Resilient demand for commercial work and infrastructure projects are helping to keep the construction sector in expansion mode for now, but the survey’s forward-looking indicators worsened in August,” Tim Moore, economics director at S&P Global Market Intelligence, said in a report on Wednesday (Sep 6). “Rising risk aversion also meant that construction firms pared back their own output growth projections, with business activity expectations slipping to the weakest since January.”
While commercial and infrastructure work has remained resilient, the property market’s woes, cutbacks to projects and local planning delays have dragged down housebuilding.
It marked the ninth straight month the housebuilding sector has been under the 50 reading separating growth and contraction. Outside of the pandemic, the downturn in residential work has been sharpest since 2009, S&P said.
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New orders across the wider construction sector fell at the fastest pace since May 2020 when the UK economy was battling the effects of the pandemic. However, employment rose for a seventh consecutive month. BLOOMBERG
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