UK Construction Activity Falls At Sharpest Rate Since 2020

UK construction activity fell at its fastest pace in more than five years in July, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI). The index dropped to 44.3, down from 48.8 in June, marking the steepest monthly decline since the early months of the pandemic.

All three major construction sub-sectors reported lower output, with civil engineering showing the most pronounced fall. Surveyed firms cited a slowdown in public-sector project pipelines and fewer new tender opportunities.

Commercial and residential activity also declined. Housebuilding, which had shown signs of recovery in June after nine consecutive months of contraction, slipped back into negative territory. Developers reported delays on active sites, weaker consumer demand, and a slowdown in incoming orders.

S&P Global’s principal economist Joe Hayes described the results as a fresh setback for the sector. Survey responses indicated that firms are scaling back material purchasing and reducing headcount in response to falling workloads. July marked the seventh consecutive month of job losses in the sector, with companies opting to freeze hiring and delay replacements for departing staff.

Wider macroeconomic uncertainty and hesitancy among clients to commit to projects were highlighted as key concerns. The survey pointed to continued caution in investment decisions, both from private clients and public bodies.

Economists expect some recovery later in the year. Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said that expected interest rate cuts by the Bank of England and ongoing government investment initiatives should support a gradual rebound in construction activity.