UK construction sector slows as housing activity drops

(Sharecast News) - Growth in the UK construction sector eased by more than expected in June due to a renewed fall in housing activity, according to a purchasing managers' index released by CIPS and S&P Global on Thursday. The construction PMI fell to 52.2 last month, down from the two-year high of 54.7 in May.

This was the fourth straight month above 50 - the level that separates contraction from growth - but well below the 53.6 reading expected by economists.

S&P Global reported a slower rise in new orders across the whole construction, which some manufacturers put down to election uncertainty, as well as softening of growth in civil engineering. However, the only sub-sector to record a decline in activity was housing, where output fell solidly following a first increase in 19 months during May.

One bright spark was the labour market, with construction job creation rising to its highest levels since August 2023.

"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. We may therefore see trends improve once the election period comes to an end," said Andrew Harker, the economics director at S&P Global Market Intelligence.

"Moreover, confidence in the year ahead outlook remained strong and firms increased employment to the largest extent in ten months."