UK Construction Activity Falls Fastest Since Covid Pandemic

UK construction activity contracted at the fastest pace in over five years in July, with the S&P Global UK Construction PMI falling to 44.3 from 48.8 in June, marking the sharpest decline since May 2020. The downturn affected all subsectors, with civil engineering experiencing the steepest drop, alongside a renewed decline in residential building and a softer fall in commercial construction. The decline was driven by delays on sites, fewer new projects, and diminished consumer confidence, leading firms to reduce material purchases and cut employment for the seventh consecutive month. Survey respondents noted a lack of tender opportunities and hesitancy among customers to commit to projects, reflecting broader domestic and international economic uncertainties. Despite weak growth expectations, companies remain cautiously optimistic about potential recovery over the next year, especially as borrowing costs are expected to fall and government investment could provide support. These challenges complicate the Labour government's target to build 1.5 million new homes amid ongoing economic pressures including inflation and rising unemployment.