British builders grow more pessimistic: PMI rises to an eight-month high, but major projects are still being collectively shelved

Zhihu Finance APP has noted that a key survey shows British builders became less optimistic about the outlook in September, with many postponing major project decisions, even though there are signs the industry's downturn is easing.

The S&P Global Purchasing Managers' Index (PMI) rose to an eight-month high of 46.1, up from 44.3 in August. This result is better than economists' expectations of 44.9, but the sector still remains below the 50 threshold that separates output growth from contraction.

Although the residential construction sub-index improved, it remains deeply in contraction territory, continuing a prolonged slump that has dashed the Labour Government's hopes of leading a housing boom.

The downturn in the UK construction industry continued in September

Rising interest rates, inflation, and weak orders have dampened the sector's growth prospects, with companies postponing decisions due to uncertainty caused by Middle East conflicts. The future activity index fell to its lowest since May.

Tim Moore, Director of Economics at S&P Global Market Intelligence, said, "Total new orders were relatively weak in September, and construction firms reported longer sales conversion cycles with clients delaying major project decisions." "This was attributed to weak demand and geopolitical tensions, with some businesses also noting severe input cost increases putting them under pressure."

When the war between the US and Iran broke out and inflationary pressures surged once again, the construction industry was already in a prolonged slump. It has consistently been the weakest link among the UK’s private sectors covered by the PMI survey, while the services and manufacturing sectors have so far weathered the shock of the conflict.

Just before the outbreak of war, builders saw their costs rise at the slowest pace in seven months. However, Moore warned that the trend of easing price pressures "seems unlikely to persist given the recent rise in fuel prices and transportation costs."