Construction Activity Contracts at Fastest Pace Since Covid Ahead of Budget 2025
The Purchasing Managers' Index (PMI) for November reveals that construction activity contracted at the fastest pace since May 2020. All three sub-sectors—civil engineering, residential, and commercial building—experienced declines. Notably, residential construction activity was the weakest since the first COVID-19 lockdown.
The PMI also indicated steep reductions in new orders and employment within the industry. Unemployment has risen from 4.1% when Labour took office to 5% currently.
The survey was conducted before the Budget 2025, ahead of the government's budget announcements. Industry responses highlighted weak demand leading up to the budget, with Frasers Group describing the pre-budget period as "very annoying" due to subdued spending, and the Society of Motor Manufacturers and Traders (SMMT) reporting car sales slipping by almost 2%, attributing the drop to budget-related drag.
The EY ITEM Club cautioned that the link between the budget and the construction downturn should be treated skeptically, noting that PMI pessimism may be amplified by expected tax rises.
