UK construction output fell slightly in June, marking the sixth consecutive month of decline, as reduced commercial and civil engineering work outweighed a modest rebound in residential building activity.

The S&P Global UK Construction Purchasing Managers’ Index™ (PMI®) rose to 48.8 in June, up from 47.9 in May, indicating the slowest contraction in overall construction activity since the downturn began in January.

Despite the modest improvement, any reading below 50.0 signals a reduction in activity.

While house building returned to growth for the first time since September 2024, with an index reading of 50.7, the expansion was marginal.

Some firms reported an increase in new projects and sales pipelines. In contrast, commercial construction activity declined at its fastest rate since May 2020, falling to 45.1, as businesses cited subdued economic conditions and cuts to investment spending.

Civil engineering output also continued to weaken, with a reading of 44.2, making it the sector’s worst-performing area.

New orders across the industry dropped for the sixth month running, with the pace of decline quickening from May.

Respondents pointed to fewer tender opportunities, stronger competition for new contracts, and client caution amid broader economic uncertainty.

Employment levels fell in June, continuing a year-long trend. Surveyed companies attributed staff reductions to weaker demand and efforts to control costs.

Purchasing activity also declined, although the decrease was the smallest since January. Supplier performance improved to its highest level in a year, despite some reports of international shipping delays.

Construction firms experienced a sharp rise in input prices during June, particularly for materials like concrete, insulation, and timber.

However, overall cost inflation slowed for the third consecutive month and was the lowest recorded since January.

Business confidence across the sector deteriorated, with just 34% of firms expecting output to rise over the next 12 months and 18% anticipating a decline.

This marks the lowest level of optimism since December 2022. Survey participants cited sluggish sales enquiries and ongoing concerns about the UK economic outlook as key factors weighing on sentiment.

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. Commercial activity fell at the sharpest rate in just over five years.

“On a brighter note, house building was the bestperforming area of the construction sector. Higher levels of residential work were recorded for the first time since September 2024 amid some reports of more stable demand conditions.

“The forward-looking survey indicators were weaker than in May. Total new orders fell at a faster pace as many construction companies signalled reduced overall workloads due to unfavourable domestic economic conditions and fragile confidence among clients.”

He added: “At the same time, business activity expectations dipped to a two-and-a-half-year low in June."

Source: theintermediary.co.uk