The UK construction industry saw levels of growth at the end of the second quarter this year largely due to activity in the commercial sector – but it was impacted more generally by a renewed slump in house building, a report found.
The S&P Global UK Construction Purchasing Managers’ Index (PMI) registered 52.2 in June, down from 54.7 in May, staying above the 50.0 “no-change” mark for the fourth consecutive month.
The latest reading signalled a “sustained improvement in overall construction activity” in the UK, the market intelligence company said.
Expectations interest rates will start to come down also contributed to positive sentiment.
“The main driver of growth continued to come from commercial activity, which increased markedly again in June,” said S&P.
Adding: “The only category to record a drop in activity was housing, where output fell solidly following a first increase in 19 months during May.”
However, the rate of growth in new business was only modest and the slowest since February. Some construction firms said uncertainty due to the general election had caused new work inflows to slow down.
That said, the pace of new jobs in the sector did pick up with construction businesses taking on more staff for the second month running and the rate of job creation was the sharpest since August last year.
Further, companies also expanded their use of subcontractors at a solid pace, with the latest increase in supply the largest in nine months.
Input costs rose only slightly again in June as some suppliers limited price rises to secure new business. And the rate of inflation ticked higher amid rising costs for some raw materials but remained well below the series average.
“While there were signs of a slowdown in the latest survey period, most notably around housing activity, firms indicated that a slowdown in new order growth was in part related to election uncertainty,” said Andrew Harker, economics director at S&P Global Market Intelligence. “We may therefore see trends improve once the election period comes to an end.
“Moreover, confidence in the year ahead outlook remained strong and firms increased employment to the largest extent in 10 months.
“In terms of inflation, there remains little sign of cost pressures picking up to any great extent, encouraging firms to expand purchasing activity. Supply-chain conditions also remained favourable.”
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