Bellwether index says comemrcial and infrastructure drove activity last month

Construction returned to growth last month but housebuilding continued to remain in the doldrums, a bellwether report said today.

The overall S&P Global/CIPS UK Construction PMI index for July climbed back into positive territory with a score of 51.7 from 48.9 the month before. Any score below 50 means a contraction in the market.

But housebuilding continued to loiter below the 50 mark for the eighth consecutive month with a reading of 43 – although the decline was the least marked since April.

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Commercial work helped nudge construction back above the 50 no change mark. But housing’s woes continued, the PMI data said

Commercial and infrastructure before turned in improved performances with scores of 54.4 and 53.9 respectively but firm said rising borrowing costs was meaning clients were taking longer to make decisions on jobs going ahead.

S&P economics director Tim Moore said: “Survey respondents commented on increased infrastructure work, office refurbishments, and resilient demand for a range of commercial projects. [But} another steep reduction in house building acted as a severe constraint on construction growth.”

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And John Glen, CIPS chief economist, added: “It’s obvious that UK interest rate rises and cost of living pressures have dealt a hammer blow to the housing sector.”

James Bailey, director and UK housing leader at PwC UK, said housing firms were having to pick and choose where to build.

“We expect to see housebuilders continuing to be selective on new starts on sites, focussing on areas where there is a greater confidence of realisable demand,” he added. “Additionally, delivering alternative tenures such as affordable housing and private rental in partnership with institutional capital is likely to continue growing.”

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