UK Construction Shrinks for Eighth Month as Housing and Civil Engineering Weigh Down Sector

Construction output continued to weaken in August, with the PMI survey marking the eighth successive month of decline. Activity across housing and civil engineering projects dragged down the sector, while business confidence hit its lowest level in more than two years.

The S&P Global UK Construction PMI reported a total industry activity score of 45.5 in August, signalling contraction, though slightly higher than July’s 44.3 — the lowest reading in over five years. A score below 50 indicates decline. Housing activity fell to 44.2, while civil engineering registered the weakest performance at 38.1, the fastest drop since October 2020. New orders also shrank for the eighth month running, though at a slower pace than earlier in the year. Tim Moore, economics director at S&P Global Market Intelligence, noted that “elevated business uncertainty and worries about broader prospects for the UK economy” were weighing heavily on outlook. Just 34% of firms expect growth in the year ahead, compared to 22% forecasting further contraction — the weakest sentiment since December 2022.

Bloom Building Consultancy director Gareth Belsham highlighted the severe impact on housebuilders, with residential construction falling at its sharpest rate since February. He warned that order books are thinning as new projects continue to stall. Despite the downturn, Belsham pointed to potential relief from the Bank of England’s recent base rate cut, which may ease debt pressures and make development finance more accessible. He also noted that while housing and civil engineering remain weak, the commercial construction sector has shown some stability.