UK construction activity drops at its fastest rate in nearly five years

Steep declines in housebuilding and engineering work have led to the biggest drop in UK construction activity since May 2020, according to a survey of building companies.

- Phillip Inman

With firms blaming a lack of demand and high interest rates, the latest S&P Global construction purchasing managers' index (PMI) slumped to 44.6 in February - a sharp drop from 48.1 in January, led by one of the biggest monthly falls in housebuilding activity on record.

Most economists had expected activity to rebound to 49.7 in February, just below the 50 mark that separates growth and contraction.

S&P said residential building work, which lies at the heart of the government's growth agenda, fell dramatically. The index for residential building sank to 39.3 - the fifth decrease in a row - the weakest-performing area of construction activity in February on record.

"Aside from the pandemic, the rate of decline was the fastest since early 2009," the data compiler said. "Survey respondents often cited weak demand conditions, headwinds from elevated borrowing costs and a lack of new work to replace completed projects."