June’s construction PMI highlights that downturn eased slightly from May’s six-year low as commercial building weakened less
June’s construction PMI rose to 38.4 in June from 38.2 in May, signalling that a revival in activity may finally be on the cards.
However, the reading remained well below the 50.0-point mark separating growth from contraction.
“The downturn in UK construction output lost some intensity in June amid a softer reduction in commercial building work,” commented Tim Moore, economics director at S&P Global Market Intelligence.
Segments are still falling, but at a slower pace than before
Commercial construction was the best-performing segment, with an index reading of 41.5 points, and was the only category to record a softer downturn than in May.
New work fell sharply again, although at the slowest pace since March. Firms cited weaker new-build housing sales, soft business investment and strong competition for contracts, while some noted improved tender opportunities in defence and energy projects.
Business optimism indicates projects could start to pick up
Business optimism recovered from May’s six-month low and reached its highest level since March, supported by hopes for public sector projects, infrastructure spending and the restart of delayed work.
However, confidence remained below its long-run average.
Improvements are welcome, but pressures still remain
Max Jones, director and head of construction at Lloyds, said: “After last month’s fall, an incremental improvement is a welcome indication that confidence is beginning to regain its footing.
“However, the sector still faces some pressures, as commodity prices and ongoing geopolitical uncertainties continue to weigh on construction firms.
“Many businesses are continuing to take a cautious approach to investment while costs remain elevated. At the same time, longer-term demand in areas such as infrastructure, energy and civil projects is helping support activity and create opportunities for growth.”
He concluded: “The focus will now be on whether these pockets of resilience can translate into a broader recovery in confidence over the coming months.”
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