The PMI score for August was 50.8, down from 51.7 in July, showing a marginal increase in overall output, according to August construction PMIs
Despite the slight increase in UK construction business activity, predictions for the coming year are less optimistic, with the weakest business activity forecasts since January.
A decline in job creation compared to the previous month was also noted in the August construction PMIs. This was largely due to a drop in sales volumes across the industry, leading to the sharpest decline in new orders in over three years.
There were differing trends across the survey’s three main construction categories. Commercial buildings continued to grow steadily (index at 54.2), while civil engineering activity (52.4) also increased, although at a slower pace than in previous months.
Housebuilding rates continue to decline in August
In contrast, housebuilding remained the weakest-performing sector (40.7), experiencing its second-fastest downturn since May 2020. Survey respondents cited subdued market conditions and project cutbacks as reasons for the decline.
August construction PMIs also showed a decline in new order volumes for the second time in three months, the steepest downturn since May 2020. Rising interest rates and economic uncertainty led to more cautious client spending, particularly in residential buildings.
Employment numbers increased for the seventh consecutive month but at a slower rate than in July. The use of sub-contractors also decreased in August, resulting in the sharpest rise in their availability since January 2010.
Suppliers’ delivery times for construction products and materials improved, with more stock availability and reduced pressures on supplier capacity. This meant that overall input costs were relatively unchanged, with only a small increase in purchasing prices in August.
UK construction companies voice concerns over future
Construction companies expressed some concerns about business activity over the next year. Worries over rising borrowing costs and a subdued housing market were mentioned frequently.
“Though the construction sector overall showed an improvement in August, several imbalances in the figures give cause for concern,” commented Dr John Glen, chief economist at CIPS.
“This below-par performance had a knock-on effect on job creation which was starting to lose momentum. The right skills remained in short supply, and without pipelines of new work coming through, recruitment levels were reduced,” he explained.
“One bright spot in August’s figures was the second biggest improvement in supplier delivery times for 14 years as constraints on raw materials eased and supply chain performance improved,” he concluded.
