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UK construction activity in July fell at the sharpest rate since 2020, dragged down by a drop in housebuilding, undermining a key government pledge to boost the number of homes built.
S&P Global’s UK Construction Purchasing Managers’ index, a closely watched gauge tracking activity in the sector, showed a fall in July to 44.3, down from 48.8 in June, the steepest drop since May 2020. A number below 50 signals a contraction in activity.
The fall exceeded economists’ expectations, with those polled by LSEG predicting a flat reading.
Civil engineering and commercial construction activity both contracted, S&P noted on Wednesday, “but a considerable drag came from a fresh drop in residential building”. Construction businesses cited site delays, fewer new orders and weaker customer confidence.
Joe Hayes, principal economist at S&P Global Market Intelligence, said that UK constructors were preparing for “challenging times” ahead.
“They’re buying less materials and reducing the number of workers on the payroll,” he said. “Expectations also continue to underwhelm, despite a modest pick-up in confidence from June’s two-and-a-half-year low.”
Composite data also published by S&P Global on Wednesday, which includes manufacturing and services, fell slightly to 50.8 in July from 51.7 the previous month.
