Construction Sector Hit by Wet Weather and Housebuilding Weakness
New research has revealed that the UK construction industry suffered a significant setback in February, with output declining due to a combination of exceptionally wet weather conditions and persistent weakness in housebuilding activity. The latest data from S&P Global's purchasing managers' index (PMI) indicates an accelerated downturn across the sector.
PMI Figures Show Accelerated Downturn
The construction PMI dropped to 44.5 in February, falling below the crucial 50-point mark that separates expansion from contraction. This represents a decline from January's seven-month high of 46.4, signaling renewed challenges for the beleaguered industry. Housebuilding emerged as the weakest segment, with its specific index figure registering at just 47.
Tim Moore, Economics Director at S&P Global, emphasized the significance of these findings: "A sharper downturn in house building was the main factor behind the setback for UK construction activity in February. Total industry activity has decreased in each month since January 2025 and the latest decline was faster than seen on average over this period."
Weather Delays and Order Weakness
Researchers identified multiple factors contributing to the sector's struggles. Construction firms reported ongoing weakness in new orders and a concerning lack of new project starts. Additionally, numerous companies specifically noted that exceptionally wet weather conditions throughout February had caused significant delays to on-site work.
The survey, which gathered responses from hundreds of company executives, revealed that total new business had fallen for thirteen consecutive months. While there were some reported improvements in infrastructure and energy sector work, these positive developments were insufficient to offset broader industry challenges.
Housing Targets Under Pressure
The lacklustre housebuilding figures are likely to increase pressure on Housing Secretary Steve Reed, as the government's ambitious target of constructing 1.5 million homes appears increasingly difficult to achieve. The residential construction segment's poor performance represents a significant obstacle to meeting this goal.
Beyond housing targets, industry experts have expressed concerns about rising input costs potentially harming construction companies and limiting growth prospects. The input cost index reached its highest level since mid-2023, driven by soaring prices for essential materials including concrete, copper, and steel.
Mixed Outlook and Economic Factors
Despite the current challenges, the data revealed some potentially positive indicators. Business expectations reached their highest level since December 2024, while employment numbers appeared to be approaching stabilization. However, overall confidence remains fragile according to industry analysts.
Elliott Jordan-Doak of Pantheon Macroeconomics offered a nuanced perspective: "A rebound in sentiment could come quickly when the skies clear, though overall confidence was chronically weak in any case." He noted that the Bank of England could potentially support construction businesses in the near-term by lowering borrowing costs, but cautioned that geopolitical tensions, particularly in the Middle East, might keep interest rates elevated for longer than anticipated.
Jordan-Doak added: "Another cut from the Monetary Policy Committee will support the sector, but we think activity is set to remain muted over the coming year as trade and geopolitical tensions weigh on confidence amongst builders."
