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Prior 39.4The decline in UK construction activity was less pronounced in December but it’s still a terrible end to the year for the sector. There were sharp falls once again in housing, commercial and civil
engineering activity as incoming new work remains subdued. Civil engineering (32.9) was the weakest-performing category of
construction activity in December, and that is despite
recording a softer rate of contraction than in November. Meanwhile, both housing activity (33.5) and commercial
construction (42.0) decreased to the greatest extent since
May 2020. Ouch.The only positive footnote is that business activity expectations rebounded to five-month high. But that’s about it.S&P Global notes that:”UK construction companies once again reported
challenging business conditions and falling workloads
in December, but the speed of the downturn moderated
from the five-and-a-half-year record seen in November.
Many firms cited subdued demand and fragile client
confidence. Despite a lifting of Budget-related
uncertainty, delayed spending decisions were still cited
as contributing to weak sales pipelines at the close of
the year.
“By sector, latest data indicated the fastest reductions
in housing and commercial construction since May 2020,
while civil engineering was the only segment to signal a
slower pace of decline than in the previous month.
“Total new orders nonetheless decreased to a much
lesser degree than in November, while business activity
expectations for the year ahead rebounded to a fivemonth high. Some survey respondents attributed greater
optimism to projections of rising infrastructure spending,
especially in the utilities sector. There were also hopes
that lower borrowing costs and easing inflationary
pressures could boost demand across the construction
sector.
“Supplier performance meanwhile improved for the
fifth month running, largely due to lower input buying.
This also contributed to a slowdown in purchasing price
inflation to its weakest since October 2024.”
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
UK construction activity is still struggling, and here’s why that matters for traders: The latest figures show a slight decline in construction activity, with civil engineering hitting a low of 32.9. This signals ongoing weakness in the sector, which could have broader implications for related markets, especially in real estate and commodities. A lack of new work suggests that demand is weak, which could lead to further declines in construction stocks and impact related sectors like materials and labor. Traders should keep an eye on how this trend develops, particularly as it could influence the Bank of England’s monetary policy decisions moving forward. If construction continues to lag, it could signal a broader economic slowdown, prompting shifts in forex pairs tied to the GBP. On the flip side, this could present a buying opportunity for contrarian traders looking at undervalued construction stocks or ETFs. Watch for any rebound in new orders or government infrastructure spending announcements, as these could provide a catalyst for recovery. Key levels to monitor include the performance of construction-related stocks and any shifts in economic indicators that might suggest a turnaround in the sector.
📮 Takeaway
Keep an eye on UK construction activity; a sustained decline could impact GBP pairs and related stocks, especially if new orders don’t improve.
