The housebuilding activity index, in the survey published yesterday by the Chartered Institute of Procurement & Supply and S&P Global, came in at 43 in August. While indicating the least-steep fall in housebuilding activity since April, the reading is well below the 50 mark and continues to signal sharp decline.
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Commercial property construction achieved its strongest growth since February, and civil engineering turned in further solid expansion in July, the survey shows.
The overall construction purchasing managers’ index, which measures changes in activity in the sector, rose from 48.9 in June to 51.7 in July on a seasonally adjusted basis.
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And net job creation in the construction sector accelerated to its fastest pace since October 2022.
Tim Moore, economics director at S&P Global Market Intelligence, said: “Another steep reduction in housebuilding acted as a severe constraint on construction growth. Around 35% of the survey panel reported a decline in residential work during July, while only 18% signalled a rise.
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“Lower volumes of housing activity have been recorded in each month since December 2022, with construction companies widely reporting subdued sales due to rising interest rates and worries about the economic outlook.”
John Glen, chief economist at CIPS, said: “Decisions about buying a new home are being delayed by many consumers. Another fall in residential building levels and for the eighth month in a row, it’s obvious that UK interest rate rises and cost of living pressures have dealt a hammer blow to the housing sector.”
The Bank of England has hiked UK base rates from a record low of 0.1% in December 2021 to 5.25%.
Highlighting more positive aspects of the CIPS survey, Mr Moore said: “July data indicated that some parts of the UK construction sector gained momentum, notably commercial building and civil engineering activity. This led to a renewed rise in total construction output which, although modest, was the fastest for five months. Survey respondents commented on increased infrastructure work, office refurbishments, and resilient demand for a range of commercial projects.”
