Construction activity expanded at a moderate pace in June. However, at 52.2, the sector PMI was down more than 2 points versus May and also short of the market consensus. Growth was positive for a fourth straight month but there were some signs that election uncertainty may have had a limited negative impact.

The deceleration was largely attributable to the housing market which saw a renewed contraction following its first expansion in 19 months in May. Commercial building was again the best performing subsector ahead of civil engineering.

Aggregate new orders increased for a fifth successive month but by the least since February amidst reports that election uncertainly had deferred some demand. Even so, overall headcount continued to rise, posting its largest increase since August last year. Purchasing activity expanded at much the same rate as in May and business confidence remained optimistic and also little changed on the month.

Input costs rose but the inflation rate was still below the series norm as supply chain conditions remained favourable.

In sum, while on the soft side of expectations, the June data still paint a reasonably positive picture of the UK construction sector. Moreover, with the election safely out the way, July could well see further improvement. Today's data put the UK RPI at minus 7 and the RPI-P at minus 5, both readings close enough to zero to indicate overall economic activity performing broadly in line with forecasts.

Construction activity is seen slowing in June but, at an expected 53.6, the sector is still forecast to see positive growth.

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.