UK construction sector has fallen at its fastest rate in over five years, according to data firm S&P Global on Wednesday.
It reported “a considerable slump in the UK construction sector” in July, as builders reported a renewed decline in housing projects. Total industry activity levels fell at the steepest pace since May 2020, it said.
This pulled the S&P Global UK Construction Purchasing Managers’ Index (PMI) down to posting 44.3 in July, from 48.8 in June. Any reading below 50 shows a contraction.
Where a reduction in activity was reported (around 29% of the survey panel), firms mentioned site delays, lower volumes of incoming new business and weaker customer confidence.
Some respondents also cited lower work undertaken on public sector projects.
Notably, of the three monitored types of construction work, civil engineering saw the sharpest drop during July. The headline PMI was also pulled lower by a renewed decline in residential building activity. As for commercial construction, a marked but softer fall was registered.
Joe Hayes, principal economist at S&P Global Market Intelligence, said UK construction suffered “a fresh setback” in July:
Looking ahead to the next 12 months, surveyed companies were optimistic of growth in activity on balance, but expectations were weak when compared with their long-run trend. This was despite business confidence ticking up slightly from June’s two-and-a-half-year low. Concerns surrounding the broader economic outlook weighed on company growth projections.