The UK's construction sector has been stuck in reverse gear for 18 months, with no sign of a turnaround. The latest figures show it shrank again last month, as the industry grapples with crippling costs and dwindling demand.
The sector's S&P Global index dropped to 38.4, its lowest point since records began, indicating a significant contraction in activity. Residential building has taken a hammering, with new projects and ongoing work plummeting. Commercial construction and civil engineering have also suffered, contributing to the overall downturn.
Economists point to two main culprits: high interest rates, which are making borrowing costs sky-high for developers and homebuyers alike; and inflationary pressures on materials and labour, squeezing profit margins to the bone.
The sector's prolonged decline suggests a deeper structural issue at play. Companies are putting investment plans on ice and delaying projects in response to the uncertain economic outlook. Fewer new orders and reduced staffing levels are becoming commonplace across construction businesses.
The consequences of this sustained contraction will be far-reaching, impacting employment, housing supply, and the broader economy. A thriving construction industry is often seen as a barometer for economic growth – its current state signals ongoing headwinds for the UK's fortunes.