UK construction industry declines for first time in 18 months

House building

The UK construction industry has declined for the first time in 18 months, according to a closely-watched survey.

The S&P Global/CIPS construction purchasing managers’ index (PMI) scored 48.9 in July, dropping from a reading of 52.6 in the previous month.

Anything above 50 indicates growth.

It was the first decline since January 2021 and the worst reading overall since May 2020.

Housebuilding fell for the second consecutive month, and civil engineering firms reported their worst result for almost two years, with a reading of 40.1.

Commercial construction work grew, but more slowly than during the previous month.

The report also said that recruitment grew at an accelerated level in July but there were still difficulties with filling vacancies and strong wage pressures.

Tim Moore, economics director at S&P Global Market Intelligence, said: “July data illustrated that cost-of-living pressures, higher interest rates and increasing recession risks for the UK economy are taking a toll on construction activity.

“Total industry output fell for the first time since the start of 2021 as civil engineering joined housebuilding in contraction territory.

“Only the commercial segment registered growth in July, supported by strong pipelines of work from the reopening of hospitality, leisure and offices.”

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), said: “Builders’ optimism remained at the lowest levels seen for two years.

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“Job creation was healthy to complete work in hand but the danger remains that, should the UK economy turn unfavourable, this will affect job hiring and the development of key skills.

“A feather-like fall in prices may ease some of the pain as access to raw materials also improved, but prices at historically high levels will continue to hamper activity in 2023.”

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