'Worst could be behind' construction sector, influential survey suggests, amid rate-cut hopes

The UK construction sector remains in decline, but the worst may be over, according to a closely watched survey.

The S&P Global UK Construction PMI came to 48.8 for the month, which still means the sector is in decline, as it is below the 50 mark, but is up from 46.8 in December and is the best figure since August 2023.

House building - which has consistently been the worst-performing part of the construction sector - continued to fall significantly, but again this was at a slower pace than past months. At one stage last year, housebuilding was falling at a pace only seen during the Global Financial Crisis and the heights of the Covid-19 pandemic.

Tim Moore, economics director at S&P Global Market Intelligence, which compiles the survey said: "UK construction companies seem increasingly optimistic that the worst could be behind them soon as recession risks fade and interest rate cuts appear close on the horizon. 

“The prospect of looser financial conditions and an improving economic backdrop meant that business activity expectations strengthened to the highest for two years in January. Moreover, there were again signs that customer demand is close to turning a corner as total new orders fell to the smallest extent for six months.”

It comes as the boss of sustainable building products firm Alumasc told the Standard that construction-sector headwinds are set to continue in 2024, but there were signs that things will improve in 2025.

Alumasc saw profits tick up despite a wider slowdown in the construction sector in the six months to 31 December.

Profits rose to £5.6 million, as revenue increased by 6.4% to £47.8 million. That came despite the fact that the construction sector as a whole declined at about the same rate as Alumasc’s revenue growth as higher interest rates hit builders.

Boss Paul Hooper told the Standard: “It’s been an encouraging half year where we’ve outperformed the underlying construction market.”

He sees headwinds continuing for the sector in 2024, but a recovery in 2025.