Latest construction activity from firms survey

Overall increased construction activity was reported for the fourth month running in the latest update to the S&P Global UK Construction Purchasing Managers’ Index.

The index, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, was at 52.2 in June, down from 54.7 in April. Anything above 50 signifies an overall increase in activity.

While civil engineering and commercial work saw increases, housing activity dipped under 50 again in June, at 47.6, after 19 months of reported decline had ended in May with marginal growth in this sector.

Commercial was the best-performing sector of the three again in June, with a third consecutive month of growth, albeit at a slower rate than was seen in May, which had been a two-year high.

Civil engineering activity increased again for the fourth month running, though at the softest rate since March.

S&P Global also reported:

• A slower rise in new orders, in some cases linked to election uncertainty.
• The sharpest rate of job creation since August 2023.
• Use of sub-contractors and availability of sub-contractors both increased, and sub-contractor rates increased modestly.
• An increase in purchasing activity for the second month running.
• More than half of respondents predicted increased activity over the next 12 months.
• The rate of input cost inflation was higher than May, but still muted as some suppliers limited price rises in an effort to secure new business.

Chief Data Officer Karl Horton said: ‘The survey respondents reported modest inflation on input costs and the BCIS General Building Cost Index has been showing a similar trend.

‘It’s encouraging to see there is optimism about increased construction activity on the horizon, particularly as and when we start to see interest rate cuts. As the respondents suggested, the run-up to the general election inevitably created some uncertainty and no doubt some decisions being delayed. Hopefully once the dust has settled, if economic conditions continue to improve, we will start to see demand increase.’

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