The headline may still show a slight rise in construction output in August but new orders suffered their steepest decline since May 2020 amid rising borrowing costs. S&P Global notes that:
“UK construction companies experienced another slump
in house building activity during August as rising interest
rates and subdued market conditions resulted in cutbacks
to client demand and new build projects in particular. Aside
from the pandemic, the recent downturn in residential work
has been the steepest since spring 2009.
“Resilient demand for commercial work and infrastructure
projects are helping to keep the construction sector in
expansion mode for now, but the survey’s forward-looking
indicators worsened in August. Total new orders decreased
at the fastest pace for more than three years amid worries
about the broader economic outlook and the impact of
elevated borrowing costs. Rising risk aversion also meant
that construction firms pared back their own output growth
projections, with business activity expectations slipping to
the weakest since January.
“August data pointed to a welcome stabilisation of
costs across the construction sector and another sharp
improvement in suppliers’ delivery times. Adding to signs
of fewer capacity pressures, the latest survey revealed the
sharpest rise in subcontractor availability for more than 13
years.”
