Housebuilding downturn gathers pace amid sluggish demand – S&P
There was a downturn in activity across UK construction, with homebuilding leading the weakness, according to monthly data for August.
Subdued demand conditions and a reduction in new projects were noted as part of the S&P Global UK Construction Purchasing Managers’ Index, which tracks total industry activity.
The index came in at 44.3 in August, down from 44.7 in July, marking a year of data below the neutral 50 value.
Anecdotal evidence cited heightened risk aversion in the wake of the Middle East conflict and delayed decision-making by clients.
However, some firms noted improvements in infrastructure work.
All three sub-sectors forming the index recorded a reduction in construction activity during August, but housing was the only category to register a faster pace of contraction than in July.
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And the downturn in residential work, with the index at 37.6, was sharper than seen elsewhere in the construction sector.
Commercial activity (47.8) fell at the slowest rate since January, while civil engineering activity (40.5) decreased to the least marked extent since March.
Construction companies signalled a fall in total new order intakes during August, but the rate of contraction was only modest and the slowest since September 2025.
However, firms were upbeat on balance about the outlook for business activity during the year ahead, but the degree of positive sentiment eased from July’s five-month high.
Around 38% of the survey panel anticipate an expansion of output, while 20% forecast a downturn.
Tim Moore, economics director at S&P Global Market Intelligence, said: “UK construction companies experienced another solid reduction in output volumes, with a faster downturn in housebuilding the main reason for a weaker overall performance during August.
“A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.
“Sluggish demand conditions and low client confidence, combined with anxiety about the impact of the Middle East conflict, were again factors contributing to lower workloads across the construction sector.”
