UK construction downturn deepens amid drop in housebuilding

The UK’s construction sector weakened further last month amid a deeper downturn in housebuilding, according to new figures.The S&P Global UK construction PMI showed a reading of 44.3 in August, dipping from 44.7 in July.Any reading above the 50.0 threshold indicates that activity in the industry is increasing while anything below means it is contracting.The latest figures show the industry remained firmly in the contraction territory having been declining since January 2025.It was also firmly below the 46 reading predicted by economists.Tim Moore, economics director at S&P Global Market Intelligence, said: “UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August.“A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.”Surveyed firms said they were impacted by subdued demand and a decrease in new projects, especially in the housebuilding sector.The housing sector saw its recent decline accelerate further in August, while commercial construction and civil engineering firms saw the rate of decline ease back.Construction companies reported lower new order intakes in August, but this was relatively modest and market the slowest fall since September last year.Thomas Pugh, chief economist at RSM UK, said: “Today’s construction PMI marks the 20th consecutive sub-50 reading and confirms that the sector continues to struggle against a backdrop of higher energy prices, elevated market interest rates and persistent uncertainty over planning reforms.Read More“Even a scorching summer, which would usually boost activity, has been little help with the official data showing output falling for three consecutive months.“We see little immediate relief for the sector as weaker real income growth and a sharp repricing in mortgage rates both weigh on demand.”