Activity in the UK construction sector contracted again in August amid cost pressures and economic uncertainty, according to a survey released on Tuesday.
The S&P Global/CIPS construction purchasing managers’ index nudged up to 49.2 from 48.9 in July, but remained below the 50.0 mark that separates contraction from expansion. Analysts had been expecting a decline to 48.0.
New orders increased only marginally, slowing to the weakest since June 2020, with some respondents signalling that customers were holding back on committing to new orders amid cost pressures.
As in July, civil engineering reported the sharpest decline in activity, with output falling markedly over the month. Commercial activity also slumped, ending a period of growth stretching back for a year-and-a-half. Still, activity on housing projects increased for the first time in three months, albeit fractionally.
Andrew Harker, economics director at S&P Global Market Intelligence, said: “The UK construction sector looks set to be in for a challenging period, according to the latest PMI data. Not only did construction activity fall for the second month running, but a range of indicators from the survey pointed to further weakness ahead. New orders slowed to a crawl, while concerns about the sector and the wider economy led to a drop in confidence.
“Price and supply pressures showed further signs of easing as waning demand throughout the sector lifted pressure on suppliers. Meanwhile, the main positive from the latest survey was a solid increase in employment. That said, hiring at least in part reflects an ongoing catch-up following the pandemic. If activity continues to fall, firms will likely soon feel that their staffing capacity is sufficient and pause hiring.”
