Construction output slumps to level last seen at height of covid pandemic

Construction output fell at its sharpest rate since the teeth of the covid-19 pandemic underlining warnings made earlier this week by building products firms that no upturn in the sector was on the horizon.

The S&P Global UK Construction Purchasing Managers Index slumped to 44.3 in July, down from 48.8 in June. It was the seventh successive month when activity remained below the 50 no change mark with a score above this figure indicating growth.

It was the steepest fall since May 2020 with all three sectors falling with buyers citing site delays, lower volumes of incoming new business and weaker customer confidence.

The index added: “Notably, of the three monitored types of construction work, civil engineering saw the sharpest drop during July. The headline PMI was also pulled lower by a renewed decline in residential building activity. As for commercial construction, a marked but softer fall was registered.”

And the index said the volume of new work coming through fell for the seventh month in a row while companies were less optimistic than previous months about future prospects.

The news tallies with comments made earlier this week in interim results statements by building products firms Travis Perkins and SIG that there was no sign of an upturn in activity in the second half of this year.

S&P’s principal economist Joe Hayes said: “Forward-looking indicators from the survey imply that UK constructors are preparing for challenging times ahead. They’re buying less materials and reducing the number of workers on the payroll. Expectations also continue to underwhelm.”

Reacting to the figures, Aecom’s head of cost management and commercial Brian Smith said: “A slower summer for construction reflects ongoing caution in the market, with clients holding back decisions amid cost pressures and capacity concerns.”

But Gareth Belsham, director of Bloom Building Consultancy, was more bleak: “There’s no sugarcoating it – this data will be tough to swallow for almost everyone in construction. Little wonder contractor confidence is weak and many construction firms are laying off payrolled staff.”