The activity in the United Kingdom construction sector fell to the fastest rate in more than five years in July after a new housing construction fall, according to a new survey.
The last index of construction purchasing managers of the United Kingdom S&P (PMI) showed a 44.3 reading last month, compared to 48.8 in June.
Any reading above the 50.0 threshold indicates that the activity in the industry is increasing, while anything below means that it is hiring.
The fall in the general activity in July was the fastest since May 2020, when the industry was affected by the Covid pandemic.
The volume of work decreased for the three subsectors in July, with companies for the construction of civil, commercial and residential engineering that deal with a weaker demand, according to the survey.
This was more pronounced for civil engineering, which saw the most steep fall, with some surveyed companies that cite less work in public sector projects.
Housing construction activity also decreased sharply after turning in June for the first time in nine months.
The companies that report a reduction in the activity said they faced delays in the sites, the lowest volumes of new works that enter and a weaker confidence of the consumer.
Joe Hayes, main economist of S&P Global Market Intelligence, said that the latest data indicated a “new setback” for the United Kingdom construction sector, with companies that “prepare for challenging times ahead.”
“They are buying less materials and reducing the number of payroll workers,” he said.
“Anecdotally, companies reported a lack of bidding opportunities and customer hesitation to commit to projects.
“The broader issues of uncertainty, both at the national level and also internationally, will do little to rekindle investment appetites.”
The employment within the construction sector fell during the seventh consecutive month in July, according to the PMI survey, with companies that report layoffs, freezing recruitment and not replace the people who leave.
However, experts said the activity should improve in the coming months as loan costs decrease and the construction of companies benefit from government investment.
Elliott Jordan-Doak, a senior economist of the United Kingdom for Pantheon macroeconomy, said: “The Bank of England will probably reduce interest rates in August, reducing indebtedness costs for companies, and the shock of tariff uncertainty will continue to fade away.
“In addition, the government approach in investment spending and planning reforms should also provide support to the construction industry.
“The PMI should recover in the coming months.”
