The latest CIPS PMI construction data points to a reversal in fortunes for the sector as total industry activity in the UK decreased for the first time in three months and at the fastest pace since May 2020.

All three main segments of construction work posted a reduction in business activity, led by a steep  and accelerated fall in house building.

Residential work was by far the worst-performing area of construction output during September, followed by civil engineering activity.

Aside from the pandemic, the latest fall in housing activity was the steepest since April 2009. Survey respondents widely commented on cutbacks to house building projects amid rising borrowing costs and weak demand conditions.

Beard Construction finance director Fraser Johns says the continued downturn in housebuilding amid low demand and higher borrowing costs is once again having a significant impact on the wider industry picture.

He comments: “There’s no question many will be encouraged by the continued easing of inflation and the news of a hold on interest rates. However, we cannot escape the fact that there is still much volatility in the sector and in the wider economy. After months of propping up the industry, commercial construction has shown it’s not immune from macro pressures.

Johns adds that for those contractors facing real pressure, now is the time to take advantage of the breathing space offered by a drop in activity to get all ducks in a row and evaluate where efforts are best placed – particularly those with a focus on residential development.

Yesterday, Mortgage Strategy reported that according to data from Glenigan, residential construction-starts in September decreased 10% on the preceding three months and had fallen back 26% on 2022 figures.