UK Construction Shrinks For First Time In 5 Months

(RTTNews) - The UK construction sector contracted for the first time in five months in June due to the downturn in housing activity, survey results from S&P Global showed on Thursday.

The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index slid to 48.9 in June from 51.6 in May. A score below 50.0 suggests contraction.

The index fell below the neutral 50.0 threshold for the first time in five months.

Although the reduction in output levels was marginal, the decline masked divergent trends across the three major categories.

Residential work contracted the most since May 2020. Rising borrowing costs and the subdued outlook for the housing market weighed on demand.

Civil engineering was the best performer with business activity rising at the second fastest rate since June 2022. Commercial building growth slipped to a three-month low.

New orders dropped for the first time since January reflecting the impact of rising interest rates on house building projects.

Companies sought to lower their inventories and cut back on purchases of materials and products. The fall in input buying was the first in five months.

Suppliers' delivery times shortened on improved availability of inputs due to rising stocks among vendors and softer demand.

There was a marginal fall in input prices in the construction sector. This was the first decline in cost burdens since January 2010.

Companies cited lower fuel, steel and timber prices alongside competitive market conditions in response to falling demand. By contrast, sub-contractor charges grew at the slowest pace in 31 months.

Optimism among construction companies were the lowest since January. Weaker confidence mostly reflected concerns related to rising interest rates and subdued housing market conditions.