The UK construction sector gained momentum last month, with work rising at its fastest pace since May, according to the S&P Global/CIPS UK Construction Purchasing Managers’ Index.  

The closely-watched measure says total industry activity came in at 53.2 in October, up from 52.3 in September, the highest reading since May, due to a combination of new project starts and strong pipelines of unfinished work. A reading above 50.0 indicates growth.  

Last month’s measure continues to pick up from the 26-month low posted in July of 48.9.   

But the report adds that new orders decreased slightly in October, ending a 28-month run of sustained growth stretching back to May 2020.  

It says: “Construction companies noted weaker confidence among clients, alongside headwinds from rising input prices and higher borrowing costs. Some firms also reported a drop in new work due to heightened political uncertainty.”  

Firms also reported their lowest degree of optimism for 29 months.  

Last month, commercial building was the best-performing category (posting 54.5), with output growth reaching a five-month high. Residential work also grew (51.2), but at a softer pace than in September. Meanwhile, civil engineering activity fell for the fourth month running (48.5).  

S&P Global Market Intelligence economics director Tim Moore says: “The forward-looking survey indicators highlight that growth will be harder to achieve in the coming months as rising borrowing costs, economic uncertainty and cost constraints all had a negative influence on order books in October.   

“The reduction in total new work was the first since May 2020 and this fuelled increased concerns about longer-term tender opportunities.   

“Business optimism regarding the year ahead slumped in October and was by far the weakest since the early pandemic months.”  

MHA Moore and Smalley partner Joe Sullivan adds: “The sector performed admirably last month under adverse conditions but yesterday’s further hike in interest rates underlines the severe challenges facing the UK housing market and residential building sectors. Over the next six months, house prices and transaction levels are almost certainly going to fall.  

“We need clear detail and positive announcements in the fiscal statement on 17 November. In particular, the sector hopes to see long-term commitment around significant infrastructure projects. UK construction depends to a large degree on a full pipeline of government projects. If these future investments bear the brunt of spending cuts the sector will feel the pain.   

“Currently reports are that work is there but projects are being delayed. If the government can inject confidence around the availability of future work this will go some way to avoiding a slump.”  

Beard finance director Fraser Johns says: “Against a backdrop of continued economic uncertainty, it’s positive to see momentum within the UK construction sector, with activity continuing to rise.  

“While supply chain pressures may have softened ever so slightly and recruitment improved, there are still challenges on the horizon such as prolonged inflation impacting both material and energy costs.   

“With the higher cost to borrow and tighter access to credit, it doesn’t come as a surprise to see a drop in confidence or the number of new orders, which looks likely to continue over the coming year.”