Construction output growth picked up in November led by a boom in commercial work, says the latest PMI data report.

Figures show the strongest rise in commercial construction activity for two-and-a-half years.

However, new order growth eased to a five-month low and year-ahead business activity expectations were the least upbeat since October 2023.

At 55.2 in November, up slightly from 54.3 in October, the headline S&P Global UK Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index tracking changes in total industry activity – pointed to a robust and accelerated expansion of overall construction activity.

The headline index has now posted above the neutral 50.0 threshold for nine months running.

In commercial work, survey respondents commented on improving customer demand and new opportunities to tender, despite relatively subdued economic conditions.

Civil engineering activity (55.9) also expanded at a strong pace in November.

That said, the rate of growth slipped to a three-month low.

House building (47.9) remained by far the weakest-performing category of construction work in November.

The respective seasonally adjusted index was inside negative territory for the second month in a row and signalled the fastest rate of decline since June.

Construction companies once again noted that elevated borrowing costs and fragile consumer confidence had an adverse impact on demand conditions.

New business volumes increased across the construction sector as a whole for the tenth successive month in November and at a sold pace.

The rate of growth nonetheless slipped to its lowest since June.

There were some reports that political and economic uncertainty linked to the Autumn Budget had affected client confidence.

Where growth was reported, with was often linked to new projects in the commercial sector was often linked to new projects in the commercial sector.

November data highlighted only a marginal rise in employment numbers, with the rate of job creation easing to a three-month low.

Looking ahead to 2025, 43% of the survey panel predict an increase in business activity during the year ahead, while 21% forecast a reduction.

Although this signalled upbeat business expectations across the construction sector, the degree of optimism was down sharply since October and the lowest for 13 months.

Anecdotal evidence from survey respondents widely suggested that worries about the UK economic outlook and impact on business investment from rising employment costs had weighed on business optimism in November.

Tim Moore, economics director at S&P Global Market Intelligence, said: “The recovery in construction activity remains somewhat lopsided.

“Strengthening demand for commercial work and civil engineering projects contrasted with a sustained downturn in house building.

“Commercial construction activity expanded at the fastest pace for two-and-a-half years in November, while residential work declined at the steepest rate since June.

“Elevated borrowing costs and fragile client confidence meanwhile acted as a brake on new order growth in November, with the upturn in sales the slowest for five months.

“A loss of momentum for new work, alongside concerns about rising employment costs, resulted in weaker job creation and falling business optimism across the construction sector.

“The degree of positive sentiment regarding year-ahead growth prospects dropped to the lowest since October 2023. Many construction companies cited concerns about the near-term UK economic outlook and subsequent cutbacks to new projects.”

Brian Smith, head of cost management at AECOM, added: “The construction industry has enjoyed a period of growth during 2024 from the low point of last winter, and November’s rise is another clear indicator that the sector has broadly got to grips with managing its long-term cost challenges.

“As firms prepare for the full impact of the Budget next year, a further interest rate cut this month or early next year would provide a further boost to the industry.

“Falling rates should support the housing market in 2025 as well as much-needed private sector investment which, together with the government’s £100bn spending commitments, will be vital to growth.

“Should that investment translate into spades in the ground, it’s crucial that firms are prepared to deliver – from both a cashflow and labour perspective.”