Construction activity expanded at a sluggish rate, much as expected in August. At 50.8, the sector PMI was just 0.1 point stronger than the market consensus and down almost a full point versus July.

Once again there were divergent trends across the three main categories. Hence, while both commercial building (54.2) and, to a lesser extent, civil engineering (52.4) continued to grow at a respectable pace, residential construction (40.7) shrank at the second-fastest rate since May 2020.

In fact, aggregate new orders fell for a second straight month and employment saw its smallest increase since July. Sub-contractor usage also softened which contributed towards the sharpest rise in availability since January 2010. At the same time, suppliers' delivery times shortened again at a near-record rate. Business expectations for the year ahead remained positive but slipped to their lowest level since January.

Inflation signals were cautiously favourable with only a marginal increase in purchase prices ensuring a decline in the inflation rate.

In line with recent months, the August update shows overall construction just about keeping its head above water but house building deep in recession territory. It also puts the UK ECDI and ECDI-P at minus 14 and minus 8 respectively, indicating that overall economic activity is falling slightly short of market expectations.

The sector PMI is seen slipping a point to 50.7.

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.