UK construction activity ended 2024 with a marked slowdown, as total business activity expanded at its weakest pace since June. The Construction PMI fell to 53.3 in December, down from 55.2 in November, indicating slower growth but above the neutral 50.0 threshold since March. Commercial activity (55.0) and civil engineering (52.9) led the sectors, though their growth also decelerated. Residential construction (47.6) continued to decline, marking its third consecutive month of contraction, driven by weak demand, elevated borrowing costs, and subdued consumer confidence.

New work growth hit its lowest point since June, with commercial sector opportunities offset by a drop in residential projects and infrastructure completions. Input purchases fell for the first time in eight months, reflecting tighter inventory control, while sub-contractor usage declined again. Supply chain challenges persisted, with mixed performance in delivery times and rising costs for sub-contractor rates and materials.

Business sentiment rebounded slightly, with 48 percent of firms expecting growth in 2025. However, optimism remains tempered by economic uncertainties, tighter budgets, and elevated inflation. While long-term expansion plans provide hope, immediate challenges in residential construction and cost management weigh heavily on the sector's outlook, leaving the RPI at minus 26 and minus 31. This means that economic activities are generally behind market expectations.

The Construction Purchasing Managers' Index (PMI) provides an estimate of business activity in the UK construction sector for the preceding month based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 170 construction companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on the regional and industry contribution to gross domestic product. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

The survey is based on techniques successfully developed in the USA over the last 60 years by the National Association of Purchasing Management. It is designed to provide one of the earliest indicators of significant change in the economy. The data collected are not opinion on what might happen in the future, but hard facts on what is actually happening at 'grass roots' level in the economy. As such the information generated on economic trends pre-dates official government statistics by many months.