UK construction growth slows as housebuilding drops

(Sharecast News) - UK construction activity rose only marginally in August, as growth slowed from the previous month, with housebuilding struggling and new orders dropping at their fastest rate in over three years. The S&P Global/CIPS UK construction purchasing managers' index (PMI) fell to 50.8 last month, down from 51.7 in July, signalling only a slight increase in overall construction output.

Any reading above 50 indicates an expansion in activity. The consensus estimate was for a reading of 50.7.

Commercial building was strong, at 54.2, holding close to a five-month high, while civil engineering growth slowed to 52.4, its lowest since April. However, housebuilding continued to be weak at just 40.7 due to subdued market conditions and cutbacks to new build projects. This was the second-fastest decline registered in housebuilding since May 2020.

Commenting on the figures, Tim Moore, economics director at S&P Global Market Intelligence, said: "Resilient demand for commercial work and infrastructure projects are helping to keep the construction sector in expansion mode for now, but the survey's forward-looking indicators worsened in August."

Following strong growth in the spring, new order volumes were down. The data said that the downturn in order books was the steepest since May 2020. "Construction companies noted that rising interest rates and concerns about the near-term economic outlook had led to more cautious spending among clients, especially in the residential building segment," the press release said.