UK homebuilding returns to growth but commercial sector slumps

The downturn in Britain’s construction industry abated slightly in June as homebuilding returned to growth, but commercial building activity tumbled thanks to mounting worries about the economy, a survey has shown.

The S&P Global UK Construction Purchasing Managers’ Index rose to 48.8 from 47.9 in May, a six-month high but still below the 50 threshold denoting growth. A Reuters poll of economists had pointed to a reading of 48.4.

The survey showed a split picture of Britain’s construction market. Housing activity expanded for the first time since September but the commercial sector contracted at the fastest rate since mid-2020, during the onset of the COVID-19 pandemic.

“Total new orders fell at a faster pace as many construction companies signalled reduced overall workloads due to unfavourable domestic economic conditions and fragile confidence among clients,” said S&P Global economics director Tim Moore said.

The survey showed business activity expectations sank in June to the lowest level since December 2022.

PMI data earlier in the week showed a faster-than-expected upturn in the dominant services sector, while manufacturing continued to contract.

The all-sector PMI rose to 51.7 in June from 50.0 in May, its highest level since October.