The latest bellwether S&P Global UK Construction Purchasing Managers’ Index recorded 46.8 in December – below the neutral 50 mark but up on November’s 45.5 mark.

But the latest survey showed better business expectations at UK construction companies for output levels during the year ahead.

Around 41% of the survey panel anticipate an increase in business activity over the course of 2024, while only 17% predict a decline.

Anecdotal evidence suggested that subdued forecasts for the UK economy were a key concern, while hopes of reduced interest rates and a turnaround in market confidence were factors cited as likely to boost construction activity.

Tim Moore, Economics Director at S&P Global Market Intelligence, which compiles the survey said: “Expectations of falling interest rates during the months ahead appear to have supported confidence levels among construction companies.

“December data indicated that 41% of construction firms predict a rise in business activity over the course of 2024, while only 17% forecast a decline. This contrasted with negative sentiment overall at the same time a year earlier.”

House building remained the weakest-performing category of construction work in December (index at 41.1), despite the rate of decline easing to its slowest since July 2023.

Civil engineering activity (index at 47.0) also posted a softer pace of contraction at the end of last year.

Commercial construction meanwhile declined only modestly (index at 47.6), but the speed of the downturn accelerated to its fastest since January 2021.

Some firms noted that concerns about the domestic economic outlook, alongside elevated borrowing costs, had led to greater caution among clients.