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Construction activity in the UK slowed in June, but managed to remain in growth territory, as firms battled decreasing new orders.
The headline seasonally adjusted S&P Global-CIPS UK construction purchasing managers' index fell to 52.6 in June from 56.4 in May - marking the weakest pace of growth for nine months.
‘Worries about the near-term economic outlook led to a sharp decline in business expectations for the year ahead. June data indicated that growth projections are now the least upbeat since July 2020,’ S&P Global explained.
Despite the drop, S&P Global said June's reading was the seventeenth consecutive month of growth.
In terms of sub-sectors, civil engineering was the ‘most resilient’, S&P Global said, with commercial activity also battling in June.
‘House building was the weakest-performing area of construction activity for the fourth month running in June. Moreover, the latest index reading of 49.3 signalled an overall downturn in residential work for the first time since May 2020,’ S&P Global added.
Total new orders were at the softest since October 2021.
Tim Moore, economics director at S&P Global Market Intelligence, said: ‘The gloomy UK business outlook and worsening consumer demand due to the cost of living crisis combined to put the brakes on construction growth in June. Commercial construction saw a considerable loss of momentum as clients exercised greater caution on new spending, while long-term infrastructure projects ensured a relatively resilient trend for civil engineering activity.’
He also said construction firms are in line for a ‘difficult’ second half, with new orders and business activity forecast to fall.
S&P Global pointed to about 71% of the survey panel reported higher purchasing prices in June, while only 1% signalled a reduction. As a result, firms saw a ‘rapid pace’ of cost inflation, but still below the survey-record high seen in June 2021.
‘Measured overall, the degree of optimism across the construction sector is now the lowest seen since July 2020,’ Moore added.
The survey is compiled from responses to questionnaires sent to a panel of around 150 construction companies. The data was collected from June 13 to 29.
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