UK construction sector growth weakest since September 2021

Growth in the UK construction sector slowed in June to its weakest rate since September last year, with housing activity down for the first time in more than two years amid worries about the economic outlook, according to a survey released on Wednesday.

The S&P Global/CIPS construction purchasing managers’ index fell to 52.6 from 56.4 in May, coming in below analysts’ expectations for a reading of 55.0. A level above 50.0 signals expansion, while a reading below indicates contraction.

Housebuilding was the weakest area of construction activity for the fourth month in a row, with the index for the sub-sector printing below 50.0 at 49.3. Meanwhile, civil engineering was the most resilient sub-sector.

New orders increased to the smallest extent since October 2021 and the survey found that concerns about the near-term economic outlook led to a sharp decline in business expectations for the year ahead.

Tim Moore, Economics Director at S&P Global Market Intelligence, said: "The gloomy UK business outlook and worsening consumer demand due to the cost of living crisis combined to put the brakes on construction growth in June. Commercial construction saw a considerable loss of momentum as clients exercised greater caution on new spending, while long-term infrastructure projects ensured a relatively resilient trend for civil engineering activity.

"House building has expanded more quickly than the rest of the construction sector over the course of the pandemic, but now finds itself as the worst-performing broad category so far in 2022. Moreover, the latest survey indicated an outright decline in residential work for the first time in just over two years.

"Construction companies appear braced for a difficult second half of the year as new order growth and business activity expectations fell again in June, reflecting inflation concerns, higher interest rates and less favourable domestic economic conditions. Measured overall, the degree of optimism across the construction sector is now the lowest seen since July 2020."