The UK construction sector picked up slightly in October, but remained in decline, amid a further slump in housebuilding.
The latest S&P Global/Chartered Institute of Procurement & Supply construction purchasing managers' index rose to 45.6 points in October, from 45.0 in September, the second-lowest reading since May 2020.
The survey showed “challenging” business conditions persisted during October, with business activity falling for the second month running amid a lack of new work to replace completed projects.
“House building decreased for the eleventh successive month in October and at a much steeper pace than elsewhere in the construction sector (index at 38.5),” S&P Global said.
“Falling work on residential construction projects was widely linked to a lack of demand and subsequent cutbacks to new projects,” the survey reported.
Civil engineering activity also decreased sharply in October (index at 43.7) and the rate of decline was the fastest since July 2022.
Meanwhile, there were signs of stabilisation in the commercial building segment, with activity falling only marginally and at a slower pace than in September (index at 49.5).
Tim Moore, economics director at S&P Global Market Intelligence, said: "October data highlighted another solid reduction in UK construction output as elevated borrowing costs and a wait-and-see approach to new projects weighed on activity.”
Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply said: “There is no doubt that UK construction is in a difficult period and there will likely be further challenging months to come.”
Samuel Tombs at Pantheon Macroeconomics said the data shows the adverse impact of the rise in interest rates on construction activity "now that the backlog of work that built up in the wake of the pandemic has been fully depleted."
He noted the "silver lining" for construction firms, however, is that supply-side constraints have continued to ease, with subcontractor availability improving for the 12th consecutive month and suppliers’ delivery times shortening for the 8th consecutive month in October.
He said that the construction PMI is consistent with the official measure of output falling at a 1% quarter-on-quarter pace.