Construction sector shrinks at fastest pace since pandemic, survey suggests

Emer MoreauBusiness reporterGetty ImagesConstruction in November was at its lowest stage for the reason that pandemicActivity within the UK’s building sector shrank final month on the quickest tempo for the reason that pandemic, partly as a result of uncertainty forward of the Price range, a carefully watched survey has indicated.The analysis from S&P International stated November noticed the steepest fall in output for five-and-a-half years, led by a downturn in infrastructure and housebuilding.It added that industrial building additionally confronted “extreme headwinds” final month as considerations over potential Price range measures “pushed shoppers to defer funding selections”.Nonetheless, some analysts questioned whether or not the survey outcomes have been too pessimistic and recommended exercise would decide up following the Price range.S&P International’s Buying Managers’ Index (PMI) for building fell to 39.4 in November from 44.1 in October, the place a rating beneath 50 signifies the sector is contracting. It was the bottom rating for the index since Could 2020.”November knowledge revealed a pointy retrenchment throughout the UK building sector as weak consumer confidence and a shortfall of latest challenge begins once more weighed on exercise,” stated Tim Moore, economics director at S&P International Market Intelligence.The survey discovered that employment within the building sector dropped for the eleventh month in a row, with the newest job cuts “probably the most marked since August 2020”.This mirrored a scarcity of latest work to interchange completed tasks and better wage prices.Optimism fell to its lowest since December 2022, Mr Moore added, “amid experiences of cutbacks to consumer budgets and pervasive worries about long-term UK financial development prospects”.Nonetheless, Matt Swannell, chief financial adviser to the EY Merchandise Membership, stated the PMI figures ought to “be approached with a wholesome diploma of scepticism”.He stated negativity amongst corporations appeared to “have been magnified by expectations of tax rises on the autumn Price range”, however with the precise rises introduced on the decrease finish of expectations, “a big rebound within the PMI subsequent month appears possible”.Rob Wooden, chief UK economist at Pantheon Macroeconomics, stated whereas the PMI survey pointed to “catastrophic circumstances” within the building sector, he discovered it “laborious to imagine that circumstances within the sector are genuinely as dangerous as throughout a full lockdown”.Nonetheless, whereas he thought development can be higher than the survey signifies, he expects exercise within the building sector “to stay muted within the coming months”.