The construction sector closed November on a sombre note, recording its steepest fall in activity since the early months of the pandemic. The PMI dropped to 39.4, signalling a deep contraction and marking the eleventh consecutive month of declining output. All three sub-sectors, including housing, commercial and civil engineering, saw their fastest downturns in more than five years, reflecting a market weighed down by fragile client confidence and hesitation ahead of the Budget.

New orders collapsed at a pace not seen since 2009 outside the pandemic, with nearly half of firms reporting reduced demand. This has filtered directly into the labour market: employment and subcontractor use continued to fall sharply as firms struggled to replace completed work amid rising wage pressures. Softer demand temporarily eased supply chain strains, yet cost pressures persisted, especially for electrical components and insulation.

Forward sentiment offered little reassurance. Although a small majority anticipated some improvement next year, optimism slipped to its weakest level since December 2022. Expectations of lower borrowing costs were balanced by concerns over reduced investment and uncertainty about the UK's economic direction. Overall, the sector remains in a prolonged and challenging downturn.

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.