Construction output increased in November, led by surging commercial work, according to the latest industry data.
The monthly S&P Global UK Construction Purchasing Managers’ Index revealed a “robust” expansion of overall construction activity. However, its data also revealed housebuilding declined for the second month in a row.
The headline growth figure was 55.2 in November, up slightly from 54.3 in October.
S&P said the index had now posted above the neutral 50.0 threshold for nine months running.
Driving the increase was the strongest rise in commercial work for two-and-a-half years at 58.1. The figure was up from 52.8 for the previous month. S&P explained this was due to improving customer demand and new opportunities to tender. Civil engineering activity – at 55.9 – also expanded up from 56.2 for October.
However, housebuilding activity declined at its sharpest pace since June to 47.9, a negative figure. The previous month’s figure was 49.4. S&P said respondents blamed borrowing costs and fragile consumer confidence.
S&P added that increasing employment costs held back staff hiring. Firms told the survey they had made greater use of subcontractors to help mitigate rising costs.
Tim Moore, economics director at S&P Global Market Intelligence, said: “Total industry activity once again expanded at a robust pace and there has been a clear acceleration in growth compared to that seen in the first half of 2024.
“However, the recovery in construction activity remains somewhat lopsided. A loss of momentum for new work, alongside concerns about rising employment costs, resulted in weaker job creation and falling business optimism across the construction sector.”
Brian Smith, head of cost management at Aecom, said the data was a clear indicator that the sector had got to grips with managing its long-term cost challenges.
He added: “As firms prepare for the full impact of the Budget next year, a further interest rate cut this month or early next year would provide a further boost to the industry. Falling rates should support the housing market in 2025 as well as much-needed private sector investment.”
The S&P findings were supported by a three-month analysis to the end of November by construction data firm Glenigan.
The data showed non-residential sector rallied in the three months to the end of November with project starts up against the previous quarter and year-on-year.
The hotel sector recorded starts increasing by 37 per cent compared with the past three months, and 71 per cent year-on-year.
Education and offices went up as well, by 31 and 24 per cent on the past three months respectively, and by 29 and 2 per cent on the past year.
Residential project starts fell by 1 per cent compared with the prior quarter, and fell by 6 per cent compared with the previous year.
Much of that decrease was down to the private housing sector, where work starts declined by 3 per cent on the previous three months, and by 1 per cent in comparison to the prior year.
Social housing improved on the prior three months, with project starts increasing by 4 per cent. But they were down by 20 per cent compared with the past year.
Glenigan economics director Allan Wilen said the “much-anticipated boost” from the change in government had not yet fully materialised, which leaves “many in the industry still waiting for a turnaround”.
