House construction activity dropped sharply in February, according to Standard & Poor’s global latest UK construction PMI.
The February PMI data highlighted another decline in UK construction production, with a sharp acceleration in decline since the beginning of 2025.
February’s 44.6 fell at 48.1 in January, and the index’s title number (the seasonally adjusted index tracks changes in total industry activity) was below the neutral 50.0 threshold for the second month.
The latest reading is also the lowest in the past five years, indicating a sharp decline in total construction activity.
It is worth noting that residential construction (39.3 index) has declined for the fifth consecutive month and is the weakest area of construction activity in February.
Apart from the pandemic, the fastest decline since the beginning of 2009. Survey respondents often cite headwinds from weak demand conditions, increased borrowing costs and a lack of new work to replace completed projects.
Commenting on the latest data, Tim Moore, Director of Global Market Intelligence Economics, S&P, said: “In addition to the pandemic, comprehensive industry activity has declined at its highest rate since December 2019. This is due to a large reduction in residential construction and civil engineering efforts, while a level of resilience is reported. Respondents from surveys widely cite the lack of new work in the housing construction sector due to soft market conditions and increased borrowing costs.
However, he said construction companies remain optimistic about growth outlook for the next 12 months, although concerns are growing over the broader UK economic outlook on average in 2024. There are also signs that rising wage costs and purchase prices have become the source of anxiety, with the latest increase in overall operating expenses since March 2023.
MHA’s Head of Construction and Real Estate Atul Kariya commented: “Starmer’s announcement on housing construction is positive news, but as today’s data shows, residential buildings have declined for the fifth consecutive month. Even though the infrastructure sector remains relatively resilient compared to residential and civil engineering, the level of activity remains under 50. Maintaining any type of recovery requires more investment.”
Kariya added: “The spring statement is a time for the government to look at the UK’s economic environment and potentially consider some of the changes to its fiscal plan. The UK must create the right environment to provide confidence to investors and construction companies.”
