The UK construction sector ended the year on a weak note, with activity continuing to decline in December, albeit at a slower pace than in November. Across the board, housing, commercial, and civil engineering projects saw sharp reductions as new work remained subdued.

Civil engineering was the weakest performer, with a PMI reading of 32.9 in December. Although this represented a contraction, it was a softer decline than the previous month. Meanwhile, housing activity fell to 33.5 and commercial construction to 42.0, marking their steepest drops since May 2020.

The key positive aspect was a rebound in business activity expectations, which rose to a five-month high. However, overall conditions remained challenging.

According to S&P Global, many construction firms reported difficult business conditions and falling workloads at the end of the year, largely due to subdued demand and fragile client confidence. Despite some easing of uncertainty following the Budget, delayed spending decisions continued to weigh on sales pipelines.

Sector-wise, housing and commercial construction recorded their fastest declines since May 2020, while civil engineering’s contraction pace eased. Total new orders decreased less sharply than in November, signalling a modest improvement. Optimism for the coming year increased, partly driven by forecasts of higher infrastructure spending, particularly in utilities. Additionally, some firms hope that lower borrowing costs and easing inflation will help boost demand.

Supplier performance improved for the fifth consecutive month, mainly because of reduced input buying. This trend contributed to a slowdown in purchasing price inflation, which hit its weakest level since October 2024.

Original Source: Justin Low of investinglive.com