By Salma El-Sakka
UK construction activity contracted at the sharpest pace since June in October, driven by the biggest slump in housebuilding so far this year, according to the latest S&P Global purchasing managers' index (PMI).
PMI Reading Shows Contraction
The construction PMI fell to 43.6 in October from 46.1 in September, below the 46.5 forecast by economists and marking nearly two years of continuous contraction. Readings below 50 indicate declining activity.
Housebuilding Pressures
Tim Moore, economics director at S&P Global Market Intelligence, said construction companies reported severe headwinds in housebuilding from rising borrowing costs, weak consumer confidence and elevated economic uncertainty. However, strong demand for data centre projects and rising workloads in energy and utilities provided some offset.
Government Scheme and Outlook
The downbeat reading comes despite the government's September launch of the Your First Home scheme, which aims to help first-time buyers in England with a 2.5% deposit and a 20% equity loan. Moore noted that firms were cautious about the year ahead, with optimism at one of its lowest levels since late 2022.
Input Cost Inflation Rises
Input cost inflation accelerated sharply from a seven-month low in September, with the steepest rise in purchasing prices since June. Rising costs linked to the Iran war are adding to challenges for building firms.
