The UK construction sector dipped in July, with its sharpest activity decline in over five years, plummeting to 44.3 from 48.8 in June. This downturn marks the steepest contraction since the early pandemic days of May 2020. All three key sub-sectors (housing, commercial, and civil engineering) registered notable declines, with civil engineering suffering the worst hit, and residential building showing a renewed slump.

Around 29 percent of surveyed firms pointed to site delays, reduced new business inflow, and diminished public sector works as key culprits. New orders declined for the seventh consecutive month, reflecting weaker demand and fewer tender opportunities. Despite a slight uptick in business confidence, expectations for year-ahead growth remain subdued.

Workforce numbers continued to shrink, with hiring freezes and layoffs extending the trend of employment decline now in its seventh month. Meanwhile, subcontractor charges climbed sharply, even as overall input inflation eased. Material purchases and delivery times both saw minor shifts, though delays returned after a six-month break. The latest data update paints a picture of a sector held back by economic uncertainty, fragile demand, and cost pressures.

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.