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The
S&P Global/CIPS UK construction Purchasing Managers' Index (PMI)
tumbled to 45.0 in September from August's 50.8, its lowest
since May 2020, when COVID-19 pandemic restrictions were in full
force and a move further below the 50 level that divides growth
from contraction.
Economists polled by Reuters had forecast a much more modest
decline to 49.9, and the figure contrasts with the less gloomy
picture for the larger services sector on Wednesday.
The all-sector PMI - which includes services, manufacturing and
construction - edged down to 48.2 in September, its lowest since
January 2021.
"A rapid decline in house building activity acted as a major
drag on workloads, with construction companies widely commenting
on cutbacks to new residential development projects in the wake
of sluggish demand and rising borrowing costs," said Tim Moore,
economics director at S&P Global Market Intelligence.
The house-building index dropped to 38.1 from 40.7 - its lowest
since April 2009, apart from two months in 2020.
Mortgage lender Nationwide reported on Monday that house prices
fell last month at their joint-fastest rate since 2009, although
mortgage rates have dropped slightly from August's peak after
the Bank of England kept rates on hold in September.
Commercial construction also fell as clients grew more concerned
about the economic outlook and civil engineering saw the
steepest decline in over a year.
On Wednesday, Prime Minister Rishi Sunak scaled back Britain's
biggest infrastructure project, a high-speed rail line between
London and Manchester, which will now only reach Birmingham, 100
miles (161 km) from London. Sunak said the 36 billion pounds
($44 billion) saved would be spent on smaller-scale transport
projects.
Alongside the weaker activity, the survey showed the biggest
rise in subcontractors' availability in 14 years and more stable
input costs after steep rises between mid 2020 and mid 2023.
($1 = 0.8247 pounds)
(Reporting by David Milliken; Editing by Toby Chopra)
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