PwC comments on January's UK Construction PMI

Commenting on the S&P Global UK Construction PMI for January, Paul Sloman, Sector Leader for Engineering and Construction at PwC UK, said:

“With the PMI registering 48.8 in January, up from 46.8 in December and the highest reading since August 2023, we see slight sector growth, but a contraction overall.

“Perhaps unsurprisingly, the residential sector, particularly new build residential output, remains the most adversely affected segment in the UK construction industry. The sector faced a sharp decline due to the compounded impact of high interest rates, which have made mortgages more expensive and home buying less accessible. Additionally, the discontinuation of the Help to Buy scheme has removed a crucial support mechanism for new homeowners. 

“The PMI notes a two-year high of business optimism recorded since January 2022, with 51% expecting growth in the next year, linked to lower borrowing costs and higher consumer confidence. The resilience of the UK construction sector in the face of significant economic and geopolitical headwinds is positive. While we anticipate a temporary contraction in 2024, the outlook for 2025 is promising. This rebound is a testament to the sector's adaptability and the evolving landscape of opportunities, from new build projects to innovative housing solutions. Despite the challenges, the sector's ability to navigate through these times is a positive indicator of its long-term growth and sustainability.”