UK construction sector recovery loses momentum in June

June data revealed weaker growth momentum across the UK construction sector, with business activity, new work and employment all expanding at slower rates than in May.

Survey respondents commented on signs of ‘renewed risk aversion’ among clients, reflecting concerns about the economic outlook and heightened political uncertainty. The latest survey also indicated that construction companies were the least optimistic about their near-term growth prospects since December 2016. At 54.8 in June, down from 56.0 in May, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered above the 50.0 no-change mark for the tenth month running. Although signalling a solid upturn in overall business activity, the rate of expansion eased from May’s 17-month peak.

Tim Moore, senior economist at IHS Markit and author of the Markit/CIPS Construction PMI, said: “The construction sector experienced a growth slowdown in June, largely reflecting weaker rises in commercial building and civil engineering activity. Residential construction work continued to increase at one of the fastest rates since the end of 2015.

“Survey respondents commented on renewed caution among clients, in response to heightened political and economic uncertainty. Fragile business sentiment led to delayed decision – making on large projects and greater concern about the outlook for workloads during the next 12 months. While construction firms remain upbeat overall about their near – term growth prospects, the degree of confidence fell to its lowest so far this year.

“Despite a softer rise in construction output, the latest survey revealed that supply chain pressures were among the most intense since early – 2015. June data also pointed to strong input price inflation, driven by resilient demand and upward pressure on costs imported construction materials.”