- The S&P Global Construction PMI gave a reading of 48.8 last month
A recovery in housebuilding failed to prevent the UK’s construction sector shrinking for the sixth successive month in June, a survey has reported.
The closely watched S&P Global Construction Purchasing Managers’ Index (PMI) gave a reading of 48.8 last month, compared to 47.9 in May.
Any figure above 50 indicates growth, while any number below represents a contraction.
Housebuilding was the sole construction category to expand, recording its first month of expansion since September 2024 amid a rise in new projects and sales pipelines.
Britain’s housing market enjoyed higher activity ahead of the stamp duty threshold for first-time buyers going down at the start of April from £425,000 to £300,000.
The Bank of England has also cut the base rate by 0.25 percentage points on four occasions since last August.
Bright spot: Housebuilding was the sole construction category to expand in June
By comparison, commercial work, such as shops, offices, and hospitality venues, endured its biggest slump since the Covid-19 pandemic in May 2020, when many building sites shut down operations due to safety concerns.
Survey respondents attributed the drop to poorer UK economic conditions and clients reducing investment spending.
But civil engineering was the worst-performing segment of construction activity as its output decreased for the sixth consecutive month.
New order books also experienced a sixth month of decline as subdued demand and heightened caution among clients depressed the rate of tender opportunities and sharpened competition for new work.
As a result, firms continued to cut their headcount and business optimism across the construction sector reached its lowest level for two-and-a-half years.
And demand for building items softened, while companies paid higher prices for materials, including concrete, insulation, and timber.
Tim Moore, economics director at S&P Global Market Intelligence, said: ‘June data highlighted a sustained downturn in UK construction output, albeit at the slowest pace in six months.
‘Shrinking workloads in the commercial and civil engineering segments weighed on total industry activity.’
Despite the difficult conditions impacting the construction market, Thomas Pugh, chief economist at RSM UK and Ireland, said the higher PMI figure showed was ‘yet another sign that the [UK] economy is recovering after the tax and tariff turmoil of ‘awful April.”
During the first week of April, employers’ National Insurance contributions rose from 13.8 per cent on annual wages above £9,100 to 15 per cent on salaries exceeding £5,000 and US President Donald Trump announced a 10 per cent baseline tariff on most US goods imports.
Pugh added: ‘Even though house prices have dropped off a little recently, we think this has much more to do with volatility around tax changes in April than any sign of a fundamental weakness.
‘We think there are probably two more interest rate cuts to come in the second half of the year, and with income growth still reasonably strong, that should support a continued recovery in the housing market over the next year.’
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