UK construction downturn remains sharp in June despite easing

(Alliance News) - The UK construction sector remained in a sharp downturn in June, although declines in activity and new orders eased slightly from May's six-year low records, data from S&P Global showed on Monday.

The seasonally adjusted S&P Global UK construction purchasing managers' index rose to 38.4 points in June from 38.2 in May. The reading remained well below the 50.0-point mark separating growth from contraction.

Construction output has now fallen in every month since January 2025, with June's decline the second-fastest since the start of the pandemic.

Commercial construction was the best-performing segment, with an index reading of 41.5 points, and was the only category to record a softer downturn than in May.

House building fell at the sharpest pace so far this year, with an index reading of 35.9 points, while civil engineering dropped to its weakest level since April 2020, at 22.1 points.

S&P Global said weaker activity reflected subdued housing market conditions, higher borrowing costs, elevated uncertainty and delayed project starts.

New work fell sharply again, although at the slowest pace since March. Firms cited weaker new-build housing sales, soft business investment and strong competition for contracts, while some noted improved tender opportunities in defence and energy projects.

"The downturn in UK construction output lost some intensity in June amid a softer reduction in commercial building work," said Tim Moore, economics director at S&P Global Market Intelligence.

"House building and civil engineering activity nonetheless registered sharper declines than in May, with the latter seeing its weakest performance since the start of the pandemic."

Business optimism recovered from May's six-month low and reached its highest level since March, supported by hopes for public sector projects, infrastructure spending and the restart of delayed work. However, confidence remained below its long-run average.

On Friday, the seasonally adjusted services PMI business activity index fell to 48.8 points in June from 49.3 in May, slightly above the flash estimate of 48.7 published in late June.

The final composite output index, which combines services and manufacturing, declined to 49.3 points in June from 49.7 in May, slightly below the flash reading of 49.4.

On Wednesday, S&P Global reported that the seasonally adjusted UK manufacturing PMI fell to 52.5 points in June from May's four-year high of 53.9, coming in below the earlier flash estimate of 53.1.

The S&P Global UK construction PMI is compiled from responses to questionnaires sent to around 150 construction companies, with survey responses collected between June 11 and 29.

By Eva Castanedo, Alliance News senior economics reporter

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