UK builders grow more pessimistic: PMI rises to eight-month high, yet major projects remain collectively shelved.

UK builders grew less optimistic about their prospects in September and held off decisions on major projects, a key survey showed, although the sectors downturn showed signs of easing. The S&P Global purchasing managers index rose to an eight-month high of 46.1, up from 44.3 in August. The reading was better than the 44.9 expected by economists, but the sector remained below the 50 level that separates output growth from contraction. While the sub-index for residential construction improved, it remained deep in contraction territory, extending a slump that has dashed the Labour governments hopes of presiding over a housebuilding boom. UK construction downturn persists in September Higher interest rates, inflation and weak orders have damped the sectors growth expectations, with companies delaying decisions because of uncertainty stemming from the Middle East conflict. The future activity index fell to its lowest level since May. Tim Moore, economics director at S&P Global Market Intelligence, said: New order volumes were relatively lacklustre in September, as construction companies reported longer conversion times from sales enquiries and delayed decisions on major projects. This was attributed to softer demand conditions and geopolitical tensions, while some firms also noted pressure from sharply rising input costs. The construction sector was already in a protracted downturn when the US-Iran war erupted and sent inflationary pressures soaring again. It has been the weakest part of the UK private sector covered by the PMI surveys, with growth in services and manufacturing so far withstanding the conflicts shock. On the eve of the war, builders costs were rising at the slowest pace in seven months. However, Moore warned that the easing in price pressures looks unlikely to persist given recent increases in fuel prices and transport costs.