Growth in the UK construction sector slowed in May as deteriorating consumer confidence and rising inflation led to the weakest rise in residential work for two years, according to a survey released on Wednesday.
The S&P Global/CIPS construction purchasing managers index fell to 56.4 from 58.2 in April, hitting its lowest level in four months. A reading above 50.0 signals expansion, while a reading below indicates contraction.
The decline was due mainly to weaker trends in housebuilding, with the index for the sub-sector down to 50.7 in May from 53.8 a month earlier, marking the worst performance for residential work since May 2020. Survey respondents suggested that subdued consumer confidence and worries about the economic outlook had weighed on demand.
Commercial building was the fastest-growing segment in May, with the index coming in at 59.8. Construction companies highlighted strong demand for commercial work despite some hesitancy due to the uncertain economic outlook. Meanwhile, civil engineering activity increased for the fifth month running and at a robust pace, with index printing at 55.5 amid a sustained boost from major infrastructure projects.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Subdued client confidence affected new order levels with the slowest rise in pipelines of new work since December 2021. The housing sector in particular showed further signs of fragility with the worst performance since May 2020 and moving closer to the danger zone of negative territory.
“Affordability concerns will be weighing on the mind of potential house buyers grappling with escalating costs for everyday items, resulting in a postponement of big purchases until the UK economy shows more resilience.
“The lack of positive sentiment was also reflected in construction companies’ confidence over the next 12 months, with optimism dropping to the weakest since August 2020 even though this was the best performing sector out of the three.”
