Latest construction activity from firms survey

Construction activity continued to increase in August, though at a slower pace than was seen in July, according to the latest update to the S&P Global UK Construction Purchasing Managers’ Index.

The index, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, was at 53.6 in August, down from 55.3 in July. Anything above 50 signifies an overall increase in activity and the index has shown overall growth for the sixth month running.

At a sector level, all three categories of construction saw increases in August. Commercial was the best-performing, albeit with growth the lowest it has been since March, with respondents highlighting tighter budget constraints among clients. Civil engineering also showed growth, but at a weaker pace than in July.

Housing activity saw growth at the fastest pace since September 2022, with respondents pointing to improving market conditions and lower borrowing costs.

Respondents reported increased input prices in August, though the rate of inflation had eased since July. They said stronger demand for construction inputs reflected rising workloads and new project starts, although some firms noted destocking efforts.

S&P Global also reported:

• Improving economic conditions and greater domestic political stability have lifted customer demand.
• Half of the panel anticipate an increase in total construction activity during the next 12 months. Just 9% expect a reduction.
• Subcontractor usage decreased for the first time since January 2024, subcontractor availability improved at the slowest rate since June 2023, and subcontractor charges increased.
• Staffing numbers were broadly unchanged, but some firms commented on a lack of candidates to fill vacancies.
• Suppliers’ delivery times shortened in August, though some respondents experienced transportation delays due to constrained haulage capacity.

Karl Horton, BCIS Chief Data Officer, said: ‘It’s encouraging to see continued growth in residential activity after such a tumultuous time for the sector. Respondents pointed to lower borrowing costs making a difference, and hopefully we’ll continue to see that through further reductions to the base rate by the Bank of England.’

To keep up to date with the latest industry news and insights from BCIS, register for our newsletter here.