UK construction sector remains in contraction in June

(Sharecast News) - UK construction output remained in contractionary territory in June, albeit to a lesser extent, according to a survey released on Friday. S&P Global's construction purchasing managers' index ticked up to 48.8 from 47.9 in May. A reading above 50 signals expansion, while a reading below indicates contraction.

The decline reflected accelerated rates of contraction in the commercial and civil engineering segments. The survey showed that commercial work fell at the fastest pace since May 2020, with the index standing at 45.1 in June. Respondents pointed to subdued UK economic conditions and cutbacks to investment spending among clients.

Meanwhile, output in civil engineering - the index came in at 44.2 - fell for the sixth month running and was the weakest-performing area of construction activity.

House building was the only area of construction work to seen an expansion in June, with an index of 50.7. S&P said higher levels of residential activity were recorded for the first time since September 2024, although the rate of growth was only marginal.

Tim Moore, economics director at S&P Global Market Intelligence, said: "June data highlighted a sustained downturn in UK construction output, albeit at the slowest pace in six months.

"Shrinking workloads in the commercial and civil engineering segments weighed on total industry activity. Commercial activity fell at the sharpest rate in just over five years.

"On a brighter note, house building was the best performing area of the construction sector. Higher levels of residential work were recorded for the first time since September 2024 amid some reports of more stable demand conditions."

Moore said the forward-looking survey indicators were weaker than in May.

"Total new orders fell at a faster pace as many construction companies signalled reduced overall workloads due to unfavourable domestic economic conditions and fragile confidence among clients," he said.

"At the same time, business activity expectations dipped to a two-and-a-half-year low in June. Survey respondents widely cited fewer tender opportunities, rising competition for new work and a projected headwind from subdued business investment during the year ahead."