Key facts
- Britain's construction sector has been in contraction for 20 consecutive months.
- The S&P Global UK Construction PMI was 44.3 in August, down from 44.7 in July.
- Housebuilding activity was a significant drag on the sector.
- Input price pressures in construction eased to their lowest level since February.
- The broader UK PMI, including manufacturing and services, improved to 51.8.
Britain's construction sector continued its prolonged downturn in August, marking 20 months of contraction, primarily due to a severe slump in housebuilding. The S&P Global UK Construction Purchasing Managers' Index (PMI) fell to 44.3, below the 50 threshold that separates growth from contraction, and also missed economists' expectations of 45.5.
While housebuilding activity deteriorated sharply, the commercial and civil engineering sectors saw slight improvements. According to Tim Moore, economics director at S&P Global, sluggish demand, low client confidence, and anxieties stemming from the Middle East conflict contributed to reduced workloads. Construction firms continued to shed jobs, though at a slower pace than in previous months.
The weakness in the housing sector poses a challenge for Prime Minister Andy Burnham's plans to increase social housing supply. On a positive note, the gauge for input prices within the construction sector dropped to its lowest point since February, indicating easing cost pressures. Official data from June showed construction output was 2.3% lower than a year prior.
Despite the ongoing weakness in construction, the broader UK economic picture showed some resilience, with the all-sector PMI, which aggregates manufacturing, services, and construction data, rising to a six-month high of 51.8 in August from 51.6 in July.