Construction firms are ‘lagging behind’ as confidence plummets
Construction firms are struggling to kick back into growth, fresh data has suggested, as more bosses are becoming worried about a bleaker future ahead.
The Labour government is pinning hopes on a revival of the construction sector to build 1.5m homes by 2030.
However, a new survey has raised doubts about whether Labour can achieve its ambitious target, given falling employment, low activity, and shattered hopes across the industry.
S&P Global’s latest purchasing managers’ index (PMI) reading has suggested construction has been in decline for eight consecutive months.
By comparison, official data released by the Office for National Statistics has shown the construction sector to benefit from higher growth than expected, with output growing by 1.2 per cent in the second quarter of the year.
But S&P Global’s survey of some 150 companies also showed that business confidence had fallen to its lowest level since December 20022.
Firms pointed to the troubles on payroll budgets as they continued to deal with higher national insurance contributions (NICs) following last year’s Autumn Budget tax raid.
Bosses also said “intense price competition” was weighing on growth.
The civil engineering sub-sector was dragged down by activity across the industry, according to the data.
Thomas Pugh, chief economist at RSM UK and Ireland, said: “Despite the warmest summer on record and below average rainfall, the construction industry still appears to be lagging well behind the services sector.”
“Indeed, the continued weakness in the housing and civil engineering balances points to the difficulty that the government has had in turning its rhetoric on housebuilding and infrastructure investment into reality on the ground.”
Steven Mulholland, CEO of the Construction Plant-hire Association, called the data a “stark warning” that construction firms are “being pushed to breaking point”.
“Construction should be driving growth, not suffering the consequences of poorly thought-through tax and regulatory changes,” he said.
Construction struggles to cement growth
It comes as the Mineral Products Association (MPA) suggested cement production hit its lowest level since 1950 in 2024 while ready-mix concrete sales hit historic lows in the second quarter of this year.
Industry professionals said it put Labour’s infrastructure plans at greater risk of breaking down.
“Cement is an essential industry, but the sector is increasingly under threat,” said Dr Diana Casey, executive director for cement and lime at the MPA.
“Cement quite literally underpins the nation’s growth and we can’t deliver new homes, schools, hospitals, transport links or clean energy infrastructure without it.
“The UK has a choice: to build these vital development projects with UK-made cement, or to build them with imports – sending jobs, investment and economic growth overseas.”
In some possible relief to builders, firms responding to S&P Global said demand for products and materials had made waiting for delivery shorter while purchasing prices increased at a slower pace than at any time this year.