The UK construction sector downturn persists. Output fell again in August. This marks the eighth consecutive month of decline. New data from S&P Global confirms this trend. The Purchasing Managers’ Index (PMI) shows a sustained slump. However, the pace of decline slowed slightly from July.
This is the longest continuous downturn since early 2020. The Covid-19 pandemic caused that previous severe contraction. Now, high interest rates and economic uncertainty are key drivers. Consequently, new work and employment levels also fell solidly.
Business optimism has plummeted significantly. It reached its lowest point since December 2022. Only 34% of firms expect a rise in output soon. This is down from 37% just one month prior. Clearly, confidence is fading across the industry.
The housing segment performed very poorly. Housebuilding activity decreased markedly again. This suggests government housing targets are increasingly at risk. The civil engineering segment was even weaker. It experienced its fastest decline since October 2020.
Commercial construction showed slight resilience. Its downturn was the least marked for three months. Yet, it still remained in negative territory overall. Therefore, no segment was immune to the challenging conditions.
Supply conditions showed some minor improvement. Vendor delivery times shortened last month. Subcontractor availability also improved somewhat. Furthermore, purchasing price inflation hit a ten-month low.
However, these are not signs of health. Instead, they mostly reflect severely subdued demand. A pronounced lack of new projects is the main cause. Elevated business uncertainty continues to paralyze investment.
Tim Moore of S&P Global commented on the findings. He noted activity has decreased throughout the entire year. August only provided a partial easing in the speed of decline. The UK construction sector downturn remains deeply entrenched. This ongoing UK construction sector downturn poses a significant challenge to economic recovery. The data underscores the severity of the UK construction sector downturn.
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