Housebuilding Activity Down Again: But is it Easing?

Facing another difficult month, Purchasing Managers’ showed a continuation of the decline in housebuilding activity for the third consecutive month, reaching almost unprecedented levels.

Seeing one of the sharpest declines in a decade, February saw a continuation of the housebuilding trends for a third consecutive month.

Amid a ‘subdued’ housing market, the third drop was less severe than in January, according to the latest data, but still perpetuates the growing concerns of the housebuilding sector.

Housebuilding activity continues to fall

Through the index compiled for the Chartered Institute of Purchasing and Supply by S&P Global recorded, any figure below 50 represents a decline in workload for the sector. Falling 2.6% under this threshold, the figure for housebuilding activity was recorded at 47.4.

Coming below the critical 50 number for a third consecutive month is almost unprecedented. However, it has increased in the 44.8 figure recorded in January, offering a slight hope that activity could increase to figures above 50.

The CIPS explained that the housing index encapsulated the: “subdued market conditions due to elevated interest rates, alongside cutbacks to new house building projects in anticipation of weaker demand.”

Despite this third consecutive drop, a more positive outlook is expected for the next monthly update as the group explained construction work as a whole picked up in the month, with total construction orders increasing at their fastest pace for nine months.

Wider construction showing positive signs as 2023 continues

Detailing this in the index the total activity rose from 48.4 to 54.6 monthon-month, which is the strongest rate for over a year, as the construction sector looks to catch up with missed deadlines due to the pandemic.

Although, upon further analysis of the figures, the dramatic rise in the statistics may be a bounce back from a disastrous set of statistics from the back end of 2022 and the beginning of 2023, which saw the worst recorded fall in activity since the first lockdown.

Tim Moore at S&P Global Market Intelligence said client confidence had been improved by “fading recession fears and an improving global economic outlook”.