![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/01\/634.jpg\")
A chart showing the UK construction PMI Photograph: S&P Global<\/p>\nUK housebuilding in deepest slump since 2020<\/p>\n
Newsflash: Britain\u2019s construction sector continued to shrink in December, as housing, commercial and civil engineering activity suffered sharp falls again.<\/p>\n
Data provider S&P Global has reported that activity across the UK construction sector, and new orders, both fell again last month.<\/p>\n
Housebuilding and commercial construction work both decreased at the fastest rate since May 2020, when the Covid-19 lockdown forced building sites to close, S&P Global\u2019s survey of purchasing managers at UK construction firms shows.<\/p>\n
That highlights the government\u2019s struggle to hit its housebuilding targets.<\/p>\n
Civil engineering was the weakest-performing category of construction activity in December; it also shrank, but not by as much as in November.<\/p>\n
This lifted the UK\u2019s construction PMI index slightly to 40.1 in December, up from 39.4 in November, but still showing a contraction \u2013 for the 12th month runnng (50 = stagnation).<\/p>\n
The drop extended the sector\u2019s downturn to 12 months, its longest unbroken run of contractions since the global financial crisis of 2007-09, Reuters reports.<\/p>\n
A chart showing the UK construction PMI Photograph: S&P Global<\/p>\n
S&P Global says there is anecdotal evidence that fragile confidence among clients had hit workloads, and that delayed investment decisions ahead of the Budget in November had hurt sales.<\/p>\n
More happily, though, business activity expectations for the year ahead rebounded to a five-month high, which suggests that budget uncertainty has lifted.<\/p>\n
Tim Moore, economics director at S&P Global Market Intelligence, says:<\/p>\n
\u201cUK construction companies once again reported challenging business conditions and falling workloads in December, but the speed of the downturn moderated from the five-and-a-half-year record seen in November. Many firms cited subdued demand and fragile client confidence. Despite a lifting of Budget-related uncertainty, delayed spending decisions were still cited as contributing to weak sales pipelines at the close of the year.<\/p>\n
By sector, latest data indicated the fastest reductions in housing and commercial construction since May 2020, while civil engineering was the only segment to signal a slower pace of decline than in the previous month.<\/p>\n
Share<\/a><\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n The oil price remains in the red this afternoon, after the US energy secretary said the Trump administration plans to control future sales of oil from Venezuela.<\/p>\n Chris Wright told an energy conference in Maimi that:<\/p>\n \u201cInstead of the oil being blockaded as it is right now, we\u2019re going to let the oil flow.\u201d<\/p>\n US crude is down 1% at $56.49 a barrel, with Brent crude 0.5% lower at $60.37 a barrel.<\/p>\n Share<\/a><\/p>\n Back in the US, the number of job vacancies has dropped to a one-year low.<\/p>\n There were around 7.1 million job openings at US companies in November, the Bureau of Labor Statistics has reported, down from 7.4m in October.<\/p>\n The number of job openings decreased by 148,000 at accommodation and food services firms, and also fell in transportation, warehousing, and utilities (-108,000); and wholesale trade (-63,000). Job openings increased in construction (+90,000).<\/p>\n Share<\/a>Germany’s DAX at record high over 25,000 points The German stock market is on course to hit a fresh record high today after a 0.8% rise in the DAX index to 25,106, my colleague Phillip Inman writes.<\/p>\n While much of the attention in the UK has been on a recovery of the FTSE<\/a> 100 to breach the 10,000 point barrier at the start of this year, the DAX has made much bigger strides than either the top 100 London-listed firms or the Paris CAC40 since the recession of 2009.<\/p>\n The DAX has \u201ccrushed\u201d both the CAC and the FTSE since 2009, delivering 583% total return versus 475% for the CAC and 435% for the FTSE – and the gap has widened sharply in recent years, says Chris Beauchamp, chief market analyst at IG.com.<\/p>\n \u201cGermany\u2019s index is packed with global industrials, autos, chemicals and capital goods that captured the post-crisis recovery in manufacturing and trade, while the FTSE was weighted towards banks, oil majors and miners that spent years delivering weak returns.\u201d<\/p>\n Much of the commentary on Germany in recent years has relied on words like stagnation and torpor as economic growth went sideways. In contrast, the stock market has rallied beyond anything the CAC40 or FTSE100 has achieved.<\/p>\n Beauchamp says Paris is more heavily weighted towards luxury brands, and while they have been very profitable, and delivered \u201cexceptional growth through the 2010s,\u201d more recently they have faced headwinds as Chinese demand weakened.<\/p>\n Meanwhile, in Frankfurt, the value of Germany\u2019s industrial base has benefited from huge investment \u201cwhile the FTSE\u2019s commodity-heavy composition struggled and the CAC\u2019s luxury concentration hit a ceiling,\u201d said Beauchamp, adding:<\/p>\n \u201cThe performance gap is structural – German equities simply had the right sector mix for the past fifteen years.\u201d<\/p>\n Kathleen Brooks, head of research at currency trader XTB, says the FTSE has improved dramatically over the last year, closing the gap.<\/p>\n \u201cIf you narrow the scale, then the FTSE 100 caught up with the Cac from 2020 onwards, and in 2025 the FTSE 100 moved in lockstep with the Dax.<\/p>\n \u201cSo, while the Dax is a strong outperformer in the long term, in a shorter time scale, the FTSE 100 is comparable.<\/p>\n \u201cIt could be a sign that FTSE 100 may start to dominate the European stock market space once more,\u201d she adds.<\/p>\n Both analysts pin some of the blame on the FTSE\u2019s previously poor performance on Brexit.<\/p>\n From 2015, the DAX began to accelerate away from the FTSE 100.<\/p>\n \u201cUK equities were unloved following the Brexit referendum and the turmoil of the next few years, while France has been out of favour since Macron\u2019s misguided election in the summer of 2024,\u201d says Beauchamp.<\/p>\n Brooks says both the Dax and the FTSE are \u201cvery international indices that don\u2019t reflect their domestic economies\u201d. About 70-80% of revenues in both indices are generated overseas.<\/p>\n \u201cI don\u2019t have data to back this up, but I assume Brexit triggered a large shift in inflows [from 2015], most of which went to the US, some went to Germany.\u201d<\/p>\n Share<\/a><\/p>\n Updated at\u00a010.29 EST<\/p>\n Shares in some US oil refiners are rallying in early trading.<\/p>\n Phillips 66 have jumped by 4.2%, among the top risers on the S&P 500 share index. It has said it can process Venezuelan crude at two of its US Gulf Coast refineries, so could benefit from Donald Trump\u2019s plan to ship millions of barrels of oil to the US.<\/p>\n Share<\/a>S&P 500 and Dow hit intraday record highs<\/p>\n Stocks on Wall Street have hit new record highs at the start of trading.<\/p>\n The Dow Jones industrial average, of 30 large US companies, gained 134 points in early trading to a new intraday high of 49,596 points.<\/p>\n Pharmaceuticals firm Amgen (+3%) are the top riser, followed by DIY chain Home Depot (+1.3%).<\/p>\n The broader S&P 500 share index is also at a new peak, up 0.1%.<\/p>\n Share<\/a>UK borrowing costs fall as bond prices rise<\/p>\n Government borrowing cost are falling today, as investors pile into sovereign debt.<\/p>\n With prices rising, the yield (or interest rate) on UK 30-year bonds has dropped to its lowest since last April, at 5.145%, a drop of 8 basis points.<\/p>\n UK 10-year bond yields have dropped by a smilar amount, to just over 4.4%.<\/p>\n European bonds are in demand too, pushing down the yields on German 10 and 30-year bunds.<\/p>\n This may be a risk-off move due to a range of geopolitical tensions. Or it might show that investors are anticipating lower inflation, and thus lower borrowing costs\u2026.<\/p>\n Bob Savage, head of markets macro strategy at BNY, says:<\/p>\n Markets are experiencing a pause in risk-taking that reflects positioning and policy uncertainty rather than a wholesale shift away from growth, with bonds bid, the dollar stronger and equities mixed.<\/p>\n Technology optimism remains the core driver, but macro data, geopolitics \u2013 especially around energy \u2013 and USD-led FX [foreign exchange] dynamics are key swing factors for near-term market momentum.<\/p>\n Share<\/a><\/p>\n Updated at\u00a009.14 EST<\/p>\n The slump in hiring at US companies reversed last month, according to new payroll data.<\/p>\n Payroll operator ADP Research has reported that American firms added 41,000 new staff in December, led by education and health services, leisure and hospitality.<\/p>\n However they fell in professional services and manufacturing.<\/p>\n Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back,\u201d said Dr Nela Richardson, chief economist at ADP.<\/p>\n A month ago, ADP reported that private employment decreased by 32,000 jobs in November, suggesting the jobs market was deteriorating. That\u2019s now been revised up to a 29,000 fall.<\/p>\n Share<\/a><\/p>\n Updated at\u00a008.40 EST<\/p>\n Shares in Warner Brothers Discovery have dipped by 0.67% in pre-market trading after its board rejected Paramount\u2019s offer.<\/p>\n They\u2019ve fallen to $28.28, away from the $30 per share which Paramount was offering, and back towards Netflix\u2019s $27.75.<\/p>\n Share<\/a><\/p>\n Warner Brothers are insisting today that Paramount\u2019s offer is \u201cinferior\u201d, due to significant costs, risks and uncertainties as compared to the Netflix merger.<\/p>\n Under the Netflix merger agreement, WBD shareholders would receive $23.25 in cash plus $4.50 of Netflix shares for each Warner share they own.<\/p>\n They would also still have ownership of Discovery Global \u2013 the TV side of the business, which includes CNN, TNT Sports in the U.S., and Discovery.<\/p>\n That\u2019s because Warner Brothers is splitting itself into a Streaming & Studios company (which Netflix has agreed to buy) and a Global Networks one. Paramount wants both parts of the company.<\/p>\n Warner Bros also says that accepting the Paramount offer could lead to costs and loss of value for WBD shareholders, explaining:<\/p>\n WBD would be obligated to pay Netflix a $2.8 billion termination fee for abandoning our existing merger agreement; incur a $1.5 billion fee for failing to complete our debt exchange, which we could not execute under the PSKY offer without PSKY\u2019s consent; and incur incremental interest expense of approximately $350 million.<\/p>\n The total cost to WBD would be approximately $4.7 billion, or $1.79 per share. These costs would, in effect, lower the net amount of the regulatory termination fee that PSKY would pay to WBD from $5.8 billion to $1.1 billion in the event of a failed transaction with PSKY. In comparison, the Netflix transaction imposes none of these costs on WBD.<\/p>\n Share<\/a>Netflix cheers Paramount’s rejection<\/p>\n Netflix has welcomed Warner Bros\u2019 decision to reject Paramount\u2019s takeover offer, and stick with its bid instead.<\/p>\n Ted Sarandos and Greg Peters, co-CEOs of Netflix, say in a statement:<\/p>\n \u201cThe WBD Board remains fully supportive of and continues to recommend Netflix\u2019s merger agreement, recognizing it as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry.<\/p>\n \u201cNetflix and Warner Bros. will bring together highly complementary strengths and a shared passion for storytelling. By joining forces, we will offer audiences even more of the series and films they love\u2014at home and in theaters\u2014expand opportunities for creators, and help foster a dynamic, competitive, and thriving entertainment industry.\u201d<\/p>\n Share<\/a>Warner Bros rejects \u2018inferior\u2019 Paramount hostile bid<\/p>\n Warner Brothers Discovery has rejected a hostile takeover offer from Paramount Skydance, and is urging shareholders to back its rival deal with Netflix instead.<\/p>\n Having pondered Paramount\u2019s $108.5bn bid, tabled on December 22<\/a>, Warner Bros has concluded that it is not in the best interests of WBD and its shareholders and does not meet the criteria of a \u201cSuperior Proposal\u201d under the terms of the merger agreement with Netflix, worth $82.7bn.<\/p>\n Warner Brothers says the \u201cextraordinary amount of debt financing\u201d behind Paramount\u2019s bid is a concern, calling it effectively a leveraged buyout.<\/p>\n As a results, Warner Bros \u201cunanimously reiterates\u201d its recommendation in support of the Netflix combination, and recommends that its shareholders reject Paramount\u2019s offer.<\/p>\n Last month Paramount sweetened its offer by saying tech billionaire Larry Ellison would provide a personal guarantee of more than $40bn for the deal.<\/p>\n In response today, Samuel A. Di Piazza Jr, chair of the Warner Bros. Discovery Board of Directors, says:<\/p>\n \u201cThe Board unanimously determined that the Paramount\u2019s latest offer remains inferior to our merger agreement with Netflix across multiple key areas.<\/p>\n \u201cParamount\u2019s offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed. Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount\u2019s offer would impose on our shareholders.\u201d<\/p>\n Paramount is proposing to buy Warner Brothers\u2019 legacy television assets as well as its studio and streaming business, which Netflix has agreed to buy.<\/p>\n Share<\/a><\/p>\n UK government debt appears to be in strong demand.<\/p>\n An auction of a \u00a34.25bn government bond attracted offers for three and a half times as much debt as was available \u2013 the highest bid-to-cover ratio since last July.<\/p>\n UK government debt has been providing a higher interest rate than rival sovereign debt, making it more attractive to investors.<\/p>\n Share<\/a><\/p>\n Updated at\u00a007.05 EST<\/p>\n Inflation across the eurozone has dropped back to the European Central Bank\u2019s target.<\/p>\n Prices rose at an average annual rate of 2% in the year December, statistics body Destatis estimates, with energy prices 1.9% lower than a year ago.<\/p>\n Share<\/a><\/p>\n China has denounced the US as a bully following Donald Trump\u2019s announcement that millions of barrels of Venezuela\u2019s oil will be taken to the US and sold.<\/p>\n Chinese foreign ministry spokesperson Mao Ning told a press conference:<\/p>\n \u201cThe United States\u2019 brazen use of force against Venezuela and its demand for \u2018America First\u2019 when Venezuela disposes of its own oil resources are typical acts of bullying.<\/p>\n \u201cThese actions seriously violate international law, gravely infringe upon Venezuela\u2019s sovereignty, and severely damage the rights of the Venezuelan people.\u201d<\/p>\n Share<\/a><\/p>\n Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, says negative sentiment appears to be \u201centrenched\u201d within the construction sector, as there are \u201cfew reasons for builders to be more optimistic in 2026\u201d.<\/p>\n He explains:<\/p>\n The Budget\u2019s prioritisation of higher welfare spending rather than investment will come as a disappointment to many builders, and the boost to activity from falling interest rates will be modest this year.<\/p>\n Meanwhile, the Chancellor\u2019s mansion tax will exert further downward pressure on the housing market. So, we expect only modest growth in construction sector activity in 2026, with risks tilted to the downside.<\/p>\n Share<\/a>ING expect next Bank of England rate cut in March<\/p>\n ING predict the Bank of England will cut interest rates in March and June, due to the weakening jobs market and easing inflation pressures.<\/p>\n That would help borrowers, and could provide some stimulus to the UK construction sector.<\/p>\n They say:<\/p>\n There are now only four vacancies for every 10 unemployed workers, below pre-Covid levels. Redundancies tentatively appear to be rising, and unusually, more companies are closing than opening. Unemployment is increasing, data quality issues notwithstanding.<\/p>\n This matters for two reasons. First, wage growth is falling rapidly and has further to go. Private sector pay growth was 6% last January, 3.9% in October, and could conceivably fall to 3% within months. That would be below pre-Covid levels. Real disposable incomes are likely to flatline this year as a result.<\/p>\n Fears of another inflation wave are \u201coverblown\u201d, they argue too:<\/p>\n The 2022 energy price spike fell on an economy with conditions ripe for inflation to take hold in a long-lasting way. That isn\u2019t true today; workers \u2013 and companies \u2013 lack the power to secure higher wages\/prices in response to rising costs. Inflation expectations may have risen in response to a spike in food prices, but we struggle to see inflation responding in the sort of long-lasting way it did three or four years ago.<\/p>\n And anyway, food inflation has started to fall. All the evidence from elsewhere \u2013 Western Europe and CEE, which tends to lead the UK \u2013 suggests it should drop lower. The UN\u2019s gauge of food input prices is falling.<\/p>\n Share<\/a>Construction PMI: what the experts say<\/p>\n Despite December\u2019s stumble, there are hopes that the UK construction sector could revive in 2026.<\/p>\n Brian Smith, head of cost management at consultancy AECOM, says:<\/p>\n \u201cThis week\u2019s icy conditions somewhat reflect the mood of the construction industry and could prevent a fast start to the year. But, as today\u2019s figures show, things are starting to improve for contractors and January will all be about positioning themselves to gradually expand capacity and be on the front foot to win new work when it comes.<\/p>\n \u201cEverything points towards a further slowdown in inflation and cuts in interest rates to match this year, which will embolden clients and developers to kickstart schemes left on the back burner. However, if everything starts at once, it\u2019s essential that the planning system is equipped to manage the uptick in projects \u2013 embracing AI and digital tools to complement the influx of new planners will prove crucial.\u201d<\/p>\n Max Jones, Director & Head of Construction at Lloyds, also sees reasons for optimism:<\/p>\n \u201cDespite today\u2019s figures, there are some encouraging signs as we head into 2026, including investment in major infrastructure projects which could help accelerate activity, offering a more optimistic outlook for the industry.<\/p>\n \u201cRecent supply chain improvements mean firms are well placed to meet increased demand, although the sector could face renewed pressure on labour availability. While project pipelines expand, competition for specialist skills may intensify and firms that can plan for this now will be best positioned to seize opportunities for the months ahead.\u201d<\/p>\n Share<\/a><\/p>\n Britain\u2019s short-term government borrowing costs have fallen, as the City reacts to the downturn in UK construction.<\/p>\n UK two-year gilt yields have fallen to their lowest level since August 2024 \u2013 they\u2019re down 4 basis points to 3.661%.<\/p>\n That\u2019s a sign that investors are anticipating cuts to UK interest rates.<\/p>\n Currently the money markets are pricing in one cut by June, and possibly a second by the end of 2026.<\/p>\n But earlier this week Goldman Sachs predicted there will be three quarter-point rate cuts by next Christmas, which would bring Bank Rate down to 3%.<\/p>\n But some<\/p>\n![\"Phillip](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/01\/Philip_Inman.png\")
Phillip Inman<\/p>\n
![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/01\/612.jpg\")
Photograph: S&P Global