UK construction activity experienced its sharpest decline since early COVID-19 restrictions, with the purchasing managers' index (PMI) dropping to 44.3 in July from 48.8 in June. This downturn is attributed primarily to a collapse in housebuilding, alongside decreases in civil engineering and commercial projects. Approximately 41% of surveyed firms indicated reduced activity, raising concerns about the Labour government's goal of building 1.5 million homes. Factors such as high construction costs, labour shortages, and economic uncertainty are hindering project commitments and investment appetite.
The UK construction purchasing managers' index (PMI) fell to 44.3 in July from 48.8 in June, the lowest since May 2020, indicating a significant contraction.
Residential construction saw a sharp decline, with the housing activity sub-index dropping from 50.7 in June to 45.3 in July, highlighting pressures on homebuilding.
Nearly 41% of firms reported falling activity in July, raising serious concerns about the Labour government's commitment to build 1.5 million homes in five years.
Firms are facing challenges due to a lack of tender opportunities and customer hesitancy, compounded by broader themes of domestic and international uncertainty.
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