Commercial Construction Hits Two-Year High Despite Challenges in Residential Sector
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The UK construction industry saw its strongest growth in commercial work in two-and-a-half years, according to the latest data from the S&P Global UK Construction Purchasing Managers’ Index (PMI). The index rose to 55.2 in November, slightly up from 54.3 in October, marking nine consecutive months above the neutral 50.0 threshold.
Tim Moore, Economics Director at S&P Global Market Intelligence, highlighted the sector’s resilience amid broader economic challenges:
“The construction sector bucked the slowdown affecting other parts of the UK economy in November. Total industry activity continued to expand robustly, showing clear acceleration compared to the first half of 2024.”
However, Moore noted that growth within the industry remains uneven. Commercial construction activity surged, achieving its fastest expansion in over two years, alongside gains in civil engineering projects. In contrast, housebuilding suffered its steepest decline since June, driven by high borrowing costs and weakened client confidence.
Despite the booming commercial sector, the growth in new orders slowed to its weakest pace in five months. Rising employment costs and economic uncertainty contributed to declining job creation and dampened business optimism.
Moore added: “Positive sentiment about future growth dropped to its lowest level since October 2023. Many construction firms cited concerns over the UK’s economic outlook, leading to cutbacks in new projects.”
While commercial and civil engineering sectors provide a silver lining, the challenges in residential construction underscore the headwinds facing the industry as it moves into 2024.
