The UK construction industry experienced its sharpest contraction in over five years during July, marking a continued decline across all major sectors. The S&P Global UK construction purchasing managers’ index (PMI) dropped to 44.3 from 48.8 in June, signalling a significant slowdown in activity. Any reading below 50 indicates a contraction in the sector.
The downturn was driven by a slump in housebuilding, which had briefly shown signs of recovery in June, as well as weaker performance across civil engineering and commercial construction. The survey highlighted that civil engineering experienced the largest decline, particularly with public-sector projects seeing reduced activity.
Firms across the industry faced delays on job sites, lower volumes of new work, and a lack of confidence from consumers. The latest figures also revealed a continued decrease in employment, marking the seventh consecutive month of job losses. Many construction businesses are now freezing recruitment and cutting back on material purchases as they prepare for a difficult outlook.
Despite these challenges, analysts expect some recovery in the coming months. Potential interest rate cuts from the Bank of England could ease borrowing costs, and government investments are expected to help stabilise the market.
