Construction activity unexpectedly rebounded in July. At 51.7, the sector PMI was nearly 4 points stronger than the market consensus, back above the 50-expansion and at its highest level in five months.

The overall improvement reflected solid gains in commercial building (54.4) and civil engineering (53.9) which, combined, were more than enough to offset continued weakness in residential construction (43.0). House building has now declined for eight straight months, albeit at a slightly shallower rate in July than in June.

Aggregate new orders rose modestly but job creation was robust with growth accelerating to its highest rate since last October. A rise in candidate availability was an important factor here. Even so, input buying fell again and weak demand contributed towards a sharp improvement in supplier performance with lead times shortening by the most in nearly fourteen-and-a-half years. Business expectations for the year ahead remained positive and were slightly stronger than in June.

Inflation signals were cautiously favourable. Hence, while input costs rose, they did so at a slower pace than in the previous month and well below the rates seen over the first half of the year.

In line with recent months, the July update shows construction holding up relatively well apart from housing which remains on a sharp downtrend. It also puts the UK ECDI and ECDI-P at exactly zero, implying that economic activity in general is moving in line with market expectations.

The sector PMI is seen sliding from June's 48.9 to 48.0 in July.

The Construction Purchasing Managers' Index (PMI) provides an estimate of business activity in the UK construction sector for the preceding month based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 170 construction companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on the regional and industry contribution to gross domestic product. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

The survey is based on techniques successfully developed in the USA over the last 60 years by the National Association of Purchasing Management. It is designed to provide one of the earliest indicators of significant change in the economy. The data collected are not opinion on what might happen in the future, but hard facts on what is actually happening at 'grass roots' level in the economy. As such the information generated on economic trends pre-dates official government statistics by many months.