Joe Sullivan, Partner at MHA says of the October Construction PMI data:

“The worse than expected drop in PMI data in October highlights that high borrowing costs, weak demand and persistent delays are continuing to hold projects back. Housing remains the sector’s Achilles’ heel, as households refinancing mortgages at much higher rates face a substantial squeeze on spending power and confidence, feeding straight through to housebuilders and their supply chains.

“The measures announced in the Budget to support first-time buyers and social housing have been broadly welcomed by the sector and could help the medium-term outlook, but they are unlikely to provide an immediate boost. The first-time buyer scheme is relatively modest and will not open until 2027, while higher taxes on landlords could further restrict rental supply and push rents up. Measures to reduce household energy bills may offer some relief, but they do not offset the broader affordability challenge.

“There are brighter spots in infrastructure, energy and data centres, where the investment pipeline remains substantial. Proposals to accelerate grid connections for data centres could support activity, alongside planned investment in utilities, transport and regional regeneration.

“But a pipeline is not work on site. The real test is whether new orders strengthen and projects move through planning, funding and procurement onto site. Until that happens, any improvements in the headline PMI over the months to come should be treated as a modest stabilisation after nearly two years of contraction rather than a meaningful recovery.”