UK January construction PMI 48.1 vs 53.4 expected

• Prior 53.3

This marks the first contraction in UK construction activity after 10 months of expansion. Firms cited delays in decision-making by
clients on major projects and general economic uncertainty
as key factors weighing on activity to start the year. Looking at the breakdown, civil engineering activity (44.6) continues to lag while commercial construction activity (48.9) returned to contraction for the month. House building activity (44.9) fell for a fourth straight month, highlighting added concerns on overall sentiment. S&P Global notes that:

“UK construction output fell for the first time in nearly a
year as gloomy economic prospects, elevated borrowing
costs and weak client confidence resulted in subdued
workloads.

“Output levels decreased across the board in January, with
particularly sharp reductions seen in the residential and
civil engineering categories.

“Construction firms noted the fastest fall in residential
work for 12 months as market conditions remained
somewhat subdued. Anecdotal evidence suggested that
caution regarding demand for new projects was prevalent
at the start of 2025, despite strong policy support for house
building and hopes for a longer-term boost to supply via
planning reform.

“The forward-looking survey indicators were also relatively
downbeat in January. New orders decreased at the fastest
pace since November 2023 amid many reports of delayed
decision-making by clients. Reduced workloads, combined
with concerns about the general UK economic outlook, led
to a dip in business activity expectations to the lowest for 15
months.

“There was little respite on the supply front, as transport
delays meant that vendor lead times lengthened to the
greatest extent for two years. Demand for construction
items softened again in January, but purchase price
inflation was the highest since April 2023 as suppliers
sought to pass on rising energy, fuel and wage costs.”

This article was written by Justin Low at www.forexlive.com.