According to purchasing managers, shrinking order books and rising cost pressures contributed to the weakest business activity expectations since October 2023.

At 48.1 in January, down significantly from 53.3 in December, the headline seasonally adjusted S&P Global UK Construction Purchasing Managers’ Index (PMI) registered below the 50.0 no-change threshold for the first time since February 2024. (Anything above 50.0 indicates growth; below indicates dwindling output.)

Construction companies cited delayed client decision-making on major projects and general economic uncertainty as factors weighing on business activity at the start of 2025.

Many firms also commented on the impact of subdued market conditions in the residential building sector.

All three broad sectors of the industry moved into negative territory in January. House-building (index at 44.9) decreased for the fourth successive month and at the fastest pace since January 2024.

Civil engineering activity (44.6) declined relatively sharply, partly due to disruptions from unusually wet weather at the start of the year.

The commercial construction category also returned to contraction in January (48.9). This was linked to a lack of tender opportunities and clients' reluctance to commit to new projects.

January data indicated a decline in incoming new work for the first time in 12 months. Although only modest, the rate of contraction was the steepest since November 2023.

Anecdotal evidence suggested that a lack of confidence among clients and worries about the UK economic outlook had contributed to fewer sales enquiries.

Purchasing activity decreased for the second month, reflecting weak order books and a lack of new work to replace completed projects.

Despite softer demand for construction products and materials, the latest survey indicated the steepest rise in input costs since April 2023.

Construction companies noted that suppliers had sought to pass on rising energy, transportation, and staff costs. Moreover, vendor performance deteriorated most for two years, partly due to shipping delays.