Latest construction activity from firms survey

S&P Global report shows construction activity still in decline

UK construction activity declined for the seventh consecutive month in July, and at the sharpest rate in over five years, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI)⁽¹⁾.

The PMI, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, registered 44.3 in July, down from 48.8 in June. Anything above 50 signifies an overall increase in activity; anything below 50 represents a decrease.

While business confidence saw a ‘faint uptick’ in July, businesses reporting a decline in activity pointed to site delays, lower volumes of new business coming in, and weaker customer confidence.

Subdued demand was said to be responsible for the volume of incoming new work declining for the seventh month in a row, as well as a drop in tender opportunities.

Dr David Crosthwaite, BCIS chief economist, said: ‘More bad news for the construction sector as the investment climate continues to soften. With talk of a fiscal black hole to be filled in the Autumn Budget, there seems to be little appetite for construction currently, despite the government’s recent announcements. We can only hope that the cost of borrowing will fall this week to counter some of the gloom.’

At a sector level, all three monitored types of work saw declining activity.

Civil engineering was again the worst-performing area of construction, experiencing the sharpest drop in July, while commercial work saw a ‘marked but softer fall’. Residential saw renewed decline after a modest increase in June.

S&P Global also reported:

• lower intakes of new work from public sector clients
• further cutbacks to workforce numbers, with lay-offs, non-replacement of leavers and recruitment freezes cited by respondents
• a lack of optimism towards broader economic conditions weighing on expectations for the next 12 months
• renewed delays in supplier delivery times after five months of improvement
• increased sub-contractor rates, decreased use of sub-contractors, and a decline in the quality of work by sub-contractors.

To keep up to date with the latest industry news and insights from BCIS register for our newsletter here.

^{(1) S&P Global UK Construction PMI  - here}