UK construction crumbles in April as ‘bumpy ride’ continues
UK construction endured another month of collapsing output in April, new research has suggested, in signs that a turnaround in the sector is still distant.
The sector has now seen a decline in output over four consecutive months, according to S&P Global’s newest purchasing managers’ index (PMI).
Civil engineering remained the weakest area of construction as the new survey of around 150 companies suggested that new projects were not being rolled out.
It meant that the reduction in total new work compared to the previous month came in as the second-fastest decline for five years.
Output in commercial construction also decreased at the fastest pace in nearly five years as firms held back against making rash investment decisions.
S&P Global’s economics director Tim Moore said that construction businesses had “endured a bumpy ride” due to the weakness of the UK economy and “hesitancy among clients”.
“An encouraging development in April was a slight improvement in business activity expectations for the year ahead,” Moore said.
“Output growth projections improved to the highest level so far this year, with a number of survey respondents citing the prospect of a turnaround in workloads across the residential building segment.”
Firms across the sector are struggling to keep tabs on costs, particularly as material prices continue to spiral and higher taxes pinch budgets.
Construction companies noticed that concrete and timber, among other items, had risen in price.
Firms were also passing on higher employment costs, brought by Chancellor Reeves’ hikes to national insurance contributions.
But many companies have struggled to survive.
Rising insolvencies
City AM recently revealed that construction business insolvencies in the first four months of this year had increased to their highest-ever level on record, with as many as 840 companies appointing liquidators or administrators.
The data, collected from the Insolvency Service, showed that nearly 20 per cent of all insolvencies came from the sector.
The collapse of construction would deal a blow to housing minister Angela Rayner’s hopes of building 1.5m homes by 2030.
The government has made housebuilding a key policy in order to ease pressures faced by first-time buyers.
But a new estimate by the Office for Budget Responsibility (OBR) suggested the government could miss its target as it said only 1m homes would be built in England.
The number of housing projects granted permission in England hit a record low in 2024, the Ministry of Housing also said earlier this year.
S&P Global’s PMI suggested there may be some cause for optimism ahead.
It said nearly half of firms projected a rise in output in the next year, in what was the highest level of business confidence since December last year.