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Mixed construction data

4 July 2024

Mixed construction data

The UK construction industry remained inside growth territory as the second quarter of the year drew to a close, although the overall expansion softened amid a renewed fall in housing activity.

These are the main findings in the headline S&P Global UK Construction Purchasing Managers’ Index for June, a seasonally adjusted index tracking changes in total industry activity.

A slower rise in new orders was also recorded, in some cases linked to general election uncertainty. In addition, the rate of input cost inflation quickened from May, but remained muted.

The headline index registered 52.2 in June, down from 54.7 in May. Remaining 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, albeit with the pace of growth softening from the previous month.

The main driver of growth continued to come from commercial activity, which increased markedly again in June. A slower increase in civil engineering activity was also recorded, with output up modestly. The only category to record a drop in activity was housing, where output fell solidly following a first increase in 19 months during May.

The rate of growth in new business was only modest and the slowest since February. Some respondents indicated that uncertainty as a result of the general election had caused new work inflows to slow.

There remained little sign of pressure on supply chains, however, with vendor delivery times shortening for the sixteenth consecutive month.

On another positive note, construction managers’ confidence in their ability to secure new contracts over the coming year supported continued optimism in the 12-month outlook. Expectations that interest rates will start to come down also contributed to positive sentiment.

More than half of respondents predicted an increase in construction activity, with the level of confidence broadly in line with that seen in May.

The index data findings were released today – the day of the general election – so hopefully the return of a government with a strong mandate will give a platform for investment and growth, whatever its complexion.

Photo: Mike Bird/Pexels

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