Housing slump sees construction output fall

Grant Prior 3 months ago

Construction buyers reported a drop in overall output in June for the first time in five months.

The bellwether S&P Global/CIPS UK Construction Purchasing Managers’ Index recorded 48.9 in June, down from 51.6 in May and below the neutral 50.0 threshold for the first time in five months.

The index was dragged down by a steep decline in residential work.

Housing work (index at 39.6) decreased at the steepest pace since May 2020. Aside from the lockdown-related fall in house building, the rate of contraction was the fastest since April 2009.

Survey respondents widely commented on weaker demand due to rising borrowing costs and a subdued outlook for the housing market.

Civil engineering was the best-performing segment (index at 53.1), with business activity rising at the second-fastest pace since June 2022 while commercial building also expanded at a solid pace in June (index at 53.0), although the rate of growth slipped to a three-month low.

June data also signalled a marginal decline in overall input prices across the construction sector – the first outright reduction in average cost burdens since January 2010.

Construction companies cited lower fuel, steel and timber prices, alongside more competitive market conditions in response to falling demand as subcontractor charges increased at the slowest pace for 31 months.

Dr John Glen, Chief Economist at the Chartered Institute of Procurement & Supply (CIPS), said: “The construction sector became rooted in contraction territory in June as interest rate rises and squeezed affordability rates impacted on residential building output which fell to its greatest extent since 2009 outside the pandemic years.

“Fewer houses being built meant the sector was dragged down overall because civil engineering and commercial building projects remained relatively buoyant with stronger pipelines of work.

“Delivery times for building materials were also the most improved since 2009. Input price inflation fell blow the no-change mark, meaning raw materials became less expensive and were more widely available for construction companies.

“Looking ahead, there were few reasons to be cheerful as optimism fell to its lowest since January. A large blot on the landscape was the fall in employment growth. With interest rates at the highest for 15 years and inflation four times over the Bank of England target, the sudden reduction in construction sector hiring is one of the red flags facing the UK economy at the moment.”


Latest news

Bidding to start shortly for second home for civil service in Darlington

Government Property Agency will invite bids in Q4 for major new Government office complex
3 hours ago

Arup and Aecom on board for £1bn Lincolnshire powerline

New high voltage overhead line and substations from Grimsby and Walpole
2 hours ago

Clients consider options after Westridge collapse

£64m turnover contractor now in hands of administrators
12 hours ago

Plans in for 800-bed Leeds student and retail scheme

Major scheme will replace The Core shopping centre in the city
1 day ago

Eric Wright Construction returns to profit

Construction division back in the black as strict contract selection pays off
12 hours ago

Balfour boss Leo Quinn backs rainbow lanyards

Chief executive vows "visible leadership" on diversity drive
12 hours ago

McAleer & Rushe awarded £60m Barking flats job

Work to start in November on near 200 rental homes project
13 hours ago

Lancashire Council awards £300m building framework

Carefoot and Conlon secure spots for major building jobs
12 hours ago

Housing contractor Real LSE files administration notice

Real LSE part of group formed in 2021 following acquisition of Rydon contracts
2 days ago

ISG clinches £155m Cat D prison expansion

Firm to deliver 780 new places at three existing prison locations
2 days ago

27-storey Salford student tower approved

540-bed student block to be built on former site of McDonalds' regional HQ
1 day ago

Morgan Sindall £48m Dumfries school job approved

Building work to start before the end of 2023
1 day ago

Pagabo starts race for £1.6bn decarbonising frameworks

Two frameworks are anchored by Great Ormond Street Hospital and Hull City Council
2 days ago

Former HS2 chairmen blast plans to scale back scheme

Fears grow for future of UK's biggest construction project
1 day ago

Redrow plans 1,400 home garden village in Rochdale

Construction on first phase could start next year
2 days ago

Bouygues/Murphy JV tipped for £2.3bn Thames tunnel job

Frontrunner emerges for Lower Thames Crossing 4.2km tunnel job
5 days ago

Subbies facing squeeze as main contractors tighten belts

Pay disputes increasing as suppliers fear major contractors returning to "bad old ways"
5 days ago

Portview takes control of Fulham Buckingham stand

Fit-out specialist steps in after main contractor failure
5 days ago

Firefighters probe cause of Leeds modular scheme blaze

Fire broke out in timber frame office job at Citu's eco development
4 days ago

Manslaughter probe dropped after demolition deaths

HSE to now lead investigation of 2019 tragedy
4 days ago

Vinci/McAlpine JV to start £105m NHS rehabilitation centre

Treasury clears New Hospital Programme job to start main construction
5 days ago

First sign of price falls for construction products

Supply returns to pre-covid levels as demand drops
6 days ago

Three giant lab buildings approved at £700m Oxford R&D district

Phase 2 Oxford North office and lab buildings to deliver 460,000 sq ft of space
6 days ago

PM fails to quash speculation about plan to axe HS2 phase 2

Sunak ducks future of HS2 question at big net zero Government briefing
6 days ago

Green light for giant North Wales offshore wind farm

Awel y Môr wind farm is the biggest renewable investment in Wales for a decade
5 days ago

T&T breaks £1bn revenue mark for first time

Global consultant enjoys strong growth across all seven geographical regions
6 days ago

Subcontractors and suppliers wanted across Scotland

Constructionline Meet the Buyer event next week at Hampden Park: Register now
6 days ago

Springfield switches strategy as private housing slumps

Scottish house builder turns back to affordable homes market
6 days ago

Sunak details zero carbon targets climbdown

Ban on gas boilers delayed five years; 50% rise in scrappage scheme
6 days ago

RG Group to build tallest student block in the world

Contractor confirmed on 45-storey tower in Leeds
6 days ago

Contractor services