UK construction growth has slowed to a three-month low as higher mortgage rates hit the housing market, according to a closely watched survey.
The global/Cips UK construction purchasing managers’ index, which measures month-on-month changes in industry activity, slowed from 53.2 in October to 50.4 in November.
This is below the 52 forecast by economists polled by Reuters but above the 50 mark that indicates a majority of businesses reporting an expansion.
Tim Moore, economics director at S&P Global Market Intelligence, which compiled the survey, said new residential building projects “had been curtailed in response to rising interest rates, cancelled sales and worries about the economic outlook”.
Commercial work was the only segment to register an overall rise in business activity in November with the index at 51.1. Housebuilding activity, meanwhile, stalled with the index at 50.0, which ended a three-month period of marginal expansion.
Construction companies often noted higher mortgage rates and falling consumer confidence as factors that had held back residential activity, according to the report.
Civil engineering activity declined for the fifth consecutive month with an index of 46.7. The latest reduction was the sharpest since August. Lower volumes of output were mainly linked to a lack of new work to replace completed projects.
Builders also reported the lowest degree of confidence about future work since May 2020.
Moore said that disregarding a three-month period of negative sentiment at the start of the pandemic, “our survey measure of business expectations across the construction sector was the joint weakest since December 2008”.
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