Construction output returned to growth in July but housebuilding levels acted as a drag on the total figure.
Robust increases in commercial building (index at 54.4) and civil engineering (53.9) were offset by a steep fall in house building (43.0).
Lower volumes of residential work have now been recorded for eight consecutive months, although the rate of decline eased to its least marked since April.
Construction companies noted that rising borrowing costs had led to fewer sales enquiries and slower decision-making among clients in July. The latest survey pointed to only a marginal rise in total new work and the rate of growth was slower than seen on average in the first half of 2023.
S&P Global Market Intelligence economics director Tim Moore explains that the July data indicated that some parts of the UK construction sector gained momentum, notably commercial building and civil engineering activity.
“This led to a renewed rise in total construction output which, although modest, was the fastest for five months. Survey respondents commented on increased infrastructure work, office refurbishments, and resilient demand for a range of commercial projects. “Meanwhile, another steep reduction in house building acted as a severe constraint on construction growth”.
He adds: “Around 35% of the survey panel reported a decline in residential work during July, while only 18% signalled a rise. Lower volumes of housing activity have been recorded in each month since December 2022, with construction companies widely reporting subdued sales due to rising interest rates and worries about the economic outlook”.
