UK construction output falls at slower rate in October

According to the report from IHS Markit/CIPS, October data pointed to a sustained decline in UK construction output, with overall volumes of work falling for the sixth consecutive month. The latest survey also revealed a sharp drop in new work, although the rate of contraction was the slowest for three months. Meanwhile, construction companies continued to reduce their workforce numbers in October, which was linked to weak order books and concerns about their near term business outlook.

At 44.2 in October, the headline seasonally adjusted UK Construction Total Activity Index registered below the crucial 50.0 no-change threshold. The latest reading was up from 43.3 during the previous month, but still close to the ten-year low seen in June (43.1).

Construction companies noted that client demand remained subdued in response to domestic political uncertainty and the economic backdrop. In some cases, survey respondents noted that unusually wet weather in October had acted as an additional headwind to construction output. Lower volumes of work were recorded across all three broad categories of activity. 

New orders dropped for the seventh month in a row during October, but the rate of decline was the least marked since July. Softer demand conditions and a lack of new work to replace completed projects resulted in another fall in staffing levels across the construction sector.

Meanwhile, business optimism towards the year-ahead outlook for construction work remained among the weakest seen since 2012. Some construction firms noted that contract awards related to large scale civil engineering projects had the potential to boost workloads in the next 12 months, although political uncertainty continued to cloud the outlook.