Total UK construction output continues to rise

Growth continued as second quarter of 2024 drew to a close, despite renewed drop in housing activity

THE UK construction sector remained inside growth territory as the second quarter of the year drew to a close, although the overall expansion softened amid a renewed fall in housing activity. A slower rise in new orders was also recorded, in some cases linked to election uncertainty.

The headline S&P Global UK Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index tracking changes in total industry activity – registered 52.2 in June, down from 54.7 in May. Remaining above the 50.0 no-change mark for the fourth consecutive month, the latest reading signalled a sustained improvement in overall construction activity in the UK, albeit with the pace of growth softening from the previous month.

The main driver of growth continued to come from commercial activity, which increased markedly again in June. That said, the rate of expansion softened from May’s two-year high. A slower increase in civil engineering activity was also recorded, with output up modestly. The only category to record a drop in activity was housing, where output fell solidly following a first increase in 19 months during May.

Anecdotal evidence suggested that the expansion in total activity reflected the securing of new contracts during the month. Data on new orders showed a fifth consecutive monthly expansion amid successful tendering and a rise in client activity. That said, the rate of growth in new business was only modest and the slowest since February. Some respondents indicated that uncertainty as a result of the general election had caused new work inflows to slow.

Confidence in the ability to secure new contracts over the coming year supported continued optimism in the 12-month outlook for construction activity in June. Expectations that interest rates will start to come down also contributed to positive sentiment. More than half of respondents predicted an increase in construction activity, with the level of confidence broadly in line with that seen in May.

Andrew Harker, economics director at S&P Global Market Intelligence, said: ‘Continued growth of the UK construction sector in June meant that the sector has recorded sustained expansion throughout the second quarter of the year. While there were signs of a slowdown in the latest survey period, most notably around housing activity, firms indicated that a slowdown in new order growth was in part related to election uncertainty. We may therefore see trends improve once the election period comes to an end.’