(Bloomberg) -- UK housebuilding declined at the sharpest pace in five months in November with construction firms blaming weak consumer confidence after the Labour government’s first budget.
S&P Global’s overall construction PMI rose to a score of 55.2 last month, up from 54.3 in October and much better than the drop to 53.5 expected by economists. Any score above 50 signals growth.
However, strong growth in commercial work and civil engineering was partially offset by housebuilders, which contracted for the second month running. The survey’s residential construction gauge slipped to 47.9, the weakest since June, as firms blamed “fragile consumer confidence” and high interest rates.
The figures underscore the challenge facing Prime Minister Keir Starmer in boosting housebuilding to solve a severe shortage of properties that cripples younger generations. He has pledged to build 300,000 homes a year in the current parliamentary term, a feat not achieved since the late 1960s.
While mortgage rates were pushed higher by Labour’s expansionary budget on Oct. 30, there have been some signs of the property market bouncing back after the uncertainty for households lifted. However, S&P said confidence and employment in the construction sector has taken a hit as a result of flagging new orders and a big rise in employer payroll taxes announced by Chancellor Rachel Reeves.
S&P said that confidence about firms’ growth prospects for the next 12 months sunk to its lowest since October 2023. Growth in new business was at the weakest since June.
”Many construction companies cited concerns about the near-term UK economic outlook and subsequent cutbacks to new projects,” said Tim Moore, economics director at S&P Global Market Intelligence.
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