UK construction PMI falls to lowest since 2020 as house-building plummets
LONDON, March 6 (Reuters) - Britain's construction sector contracted sharply in February, with residential house-building declining at one the fastest rates since 2009 due to weak demand and high borrowing costs, according to a survey published on Thursday.
The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' Index fell to 44.6 last month from January's 48.1, its weakest level since May 2020 and below all forecasts in a Reuters poll of economists.
The all-sector PMI, which combines the services, manufacturing and construction sectors, fell to a 16-month low of 50.0 in February from 50.3 in January.
The construction PMI's gauge of housebuilding tumbled to 39.3 from 44.9 in January, one of the sharpest downturns on record, excluding the global financial crisis and the start of the COVID-19 pandemic.
"Sharply declining order books rippled through the UK construction sector in February, which led to accelerated reductions in output volumes, employment and input buying," Tim Moore, economics director at S&P Global Market Intelligence, said.
"Weak demand conditions were attributed to entrenched caution among clients, against a backdrop of subdued consumer confidence and lacklustre economic performance" he added
Total new orders declined by the most since May 2020, with firms citing cutbacks to investment and concerns about economic growth.
The pace of job-shedding accelerated last month, with the employment index at its lowest since November 2020. Moore said there were signs that a hike in payroll costs, due to come into force in April, was having an impact.
Recent business surveys have shown declining business optimism and similar concerns about investment, hiring and demand due to measures announced in finance minister Rachel Reeves' October budget.
Other sectors measured by the PMI fell, too. Civil engineering activity was at its weakest in more than four years, while commercial work fell marginally.
Input costs increased by the most in almost two years as suppliers sought to pass on higher raw material, energy, fuel and wage costs.
The all-sector PMI, which combines the services, manufacturing and construction sectors, fell to a 16-month low of 50.0 in February from 50.3 in January.
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Sign up for Scottish Sun newsletter Sign up 10 Many traders worry they could be priced out, pushed aside, or left behind Credit: Paul Edwards 10 Others are worried the character of the market won't survive the changes Credit: Paul Edwards 10 Sue French, 60, who has worked at Ellis's Pet Store for 43 years, blames the decline on competition Credit: Paul Edwards Hammersmith and Fulham Council approved Yoo Capital's £5million proposal to regenerate the area in late 2023, leading to gentrification fears among traders. The housing development will be located on the Old Laundry Site land opposite the market and includes the demolition of an apparent former homeless hostel. The council will manage the homes, with the scheme to include the revamp of sections of the market space itself, leaving many traders worried they'll be ushered out. However, many say the death knell was already sounded back in 2008, when the gargantuan Westfield shopping centre first opened. 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Online has defeated us and people going straight to Amazon and ordering from China. There's no parking and that's been the most challenging thing – it's acting like a deterrent to a lot of customers. Tony Lucky Tony Lucky, 67, owner of ZamZam Luggage, blames high parking charges and online competition. 'Online has defeated us and people going straight to Amazon and ordering from China,' he said. 'There's no parking and that's been the most challenging thing – it's acting like a deterrent to a lot of customers. Every hour it costs £5 or you get a parking fine of £80. 'Yoo Capital want to build more flats and don't care about the market,' he said. 'This market has been here 100 years and no problem – but now they want to break all this and rebuild the flats.' 'We need a change, but the right one' Abdul Idris, 60, has worked at his home goods stall since childhood. 'Tesco and other big stuff have been taking the spotlight away from shops in the market,' he said. 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