Housebuilding posted “another sharp fall” as it dragged UK construction output to its third monthly fall in a row in November. 

Overall, construction work registered a 45.5 mark last month, edging down from 45.6 in October, according to the S&P Global/ CIPS UK Construction Purchasing Managers’ Index.  

November’s reading was the second-lowest since May 2020. A mark of above 50.0 indicates growth. 

Firms blamed high borrowing costs and “subdued demand for new housing projects” for weak construction activity.  

The survey points out that housebuilding, at 39.2, “remained by far the weakest-performing segment”, followed by civil engineering, at 43.5, while commercial building “showed some resilience,” at 48.1. 

The report says: “November’s data suggested a continued lack of new work to replace completed projects.  

“Total new orders decreased for the fourth month running, albeit at the slowest pace since August.  

“Customer hesitancy and greater borrowing costs were often reported as weighing on sales volumes, especially in the housing category.” 

S&P Global Market Intelligence economics director Tim Moore adds: “A slump in house building has cast a long shadow over the UK construction sector and there were signs of weakness spreading to civil engineering and commercial work during November.  

“Residential construction activity has now decreased in each of the past 12 months and the latest reduction was still among the fastest seen since the global financial crisis in 2009.  

“Elevated mortgage costs and unfavourable market conditions were widely cited as leading to cutbacks on house building projects.” 

Beard finance director Fraser Johns points out: “Despite some resilience in the commercial sector, the headlines will continue to focus on house building remaining the weakest performing sector, which continues to have a heavy impact on construction output as a whole.   

“While it seems the Bank of England has now paused its rate rising agenda, the news of rates staying ‘higher for longer’ and general uncertainty in the UK economy could signal further hesitance from both potential homeowners and clients next year, too.” 

MHA construction and real estate specialist Brendan Sharkey adds: “In reality, the last three months have shown a significant decline in activity compared to the year as a whole.  

“Confidence in the market is generally very low, and the reality is that the next few months are not going to be any easier. 

“Pipelines are looking good on paper, particularly for the second half of the year. But with the economy the way it is, and interest rates are set to continue as they are, will these projects get deferred?  

“The lack of announcements on housing or infrastructure in the Autumn Statement has not helped sector sentiment.”