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(Bloomberg) — British builders posted the largest decline in output since November as the Iran war pushed up input prices and discouraged sales.
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S&P Global’s gauge of construction activity declined to a five-month low of 39.7 in April, down from 45.6 in March. The index fell further below the 50 threshold signaling decline, defying economists’ expectations of a slight uptick to 46.
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Builders reported input-cost inflation rising to the highest since June 2022 when Russia’s invasion of Ukraine triggered a rally in commodity prices. Some said they were stocking up on raw materials, reflecting worries of supply disruptions and cost rises.
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The survey adds to evidence that the Iran energy price shock is driving up inflation and denting growth prospects in the UK. Builders blamed fuel costs for the rapid increase in price pressures, noting that suppliers were passing on higher transport costs.
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“A rapid acceleration of input cost inflation was seen across the UK construction sector in April,” said Tim Moore, economics director at S&P Global Market Intelligence. “Around two-thirds of the survey panel reported higher cost burdens in April, which was overwhelmingly linked to fuel surcharges and subsequent rises in raw material prices.”
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Building activity continued to decline rapidly across all sectors, as weak confidence among clients depleted pipelines. Delivery times rose at the sharpest rate since December 2022, increasing for a second month, due to international shipping delays and difficulties importing materials from the Gulf region.
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Sluggish demand prompted businesses to cut jobs at the steepest rate in four months. Some reported they’re not replacing voluntary leavers, to cope with wage pressures and fewer new orders.
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Construction output has been in decline since January 2025 and the war in Iran makes a recovery less likely. Builders still expect an improvement in future activity, but the level of optimism sank to its lowest level in five months.
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