| Actual | Previous | |
| Index | 38.2 | 39.7 |
Highlights
The latest global UK construction PMI paints a challenging picture for the UK construction sector, with activity contracting sharply amid weak demand, rising costs, and heightened economic uncertainty. The headline PMI fell from 39.7 in April to 38.2 in May, marking the seventeenth consecutive month of contraction and the steepest decline since the pandemic period of May 2020.
The downturn was broad-based across all major construction segments. Residential construction remained the weakest area, reflecting the adverse effects of elevated borrowing costs and subdued housing demand. Commercial construction also deteriorated significantly as businesses delayed investment decisions due to inflationary pressures and geopolitical uncertainty. Although civil engineering activity declined at a slightly slower pace, overall sector performance remained deeply negative.
Demand conditions weakened further, with new orders falling at the fastest rate in six years. Project postponements, budget constraints, and political uncertainty contributed to fewer tender opportunities and reduced workloads. Consequently, firms continued to cut employment and purchasing activity.
Inflationary pressures intensified despite weakening demand. Rising fuel, energy, transportation, and subcontractor costs pushed input price inflation to its highest level since June 2022. Supply chain conditions also worsened, with supplier delivery delays reaching their most severe level since December 2022. In summary, the report suggests a sector facing significant headwinds, with weak demand and rising costs outweighing modest optimism linked to future energy and infrastructure projects.
Definition
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.
Description
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.