Housebuilding returns to growth but industry optimism remains stuck in reverse, latest data says

Housebuilding returned to growth last month new figures out this morning have said but the sector’s revival was not enough to stop a drop in overall construction activity for the sixth successive month.

The bellwether S&P Global UK Construction Purchasing Managers Index hit 48.8 in June – up from 47.9 recorded the month before – but still below the 50 no change mark. Any score below this figure means contraction.

Housebuilding edged back into the black with a score of 50.7, a jump from the 45.1 figure registered last time. Kelly Boorman, national head of construction at restructuring firm RSM, said the rise “implies that recent government announcements to remove red tape and unlock new homes are finally mobilising projects despite market uncertainty around house prices and planning delays”.

But the good news was offset by the fastest fall in commercial activity since May 2020 which slipped from 49.5 in May to 45.1 last month. Civil engineering activity continued to remain in the doldrums with a score of 44.2 and the sixth successive reverse.

The index added: “New orders decreased at an accelerated pace. This contributed to the weakest degree of business optimism across the construction sector for two-and-a-half years.”

Tim Moore, economics director at S&P Global, said of the overall mood: “Survey respondents widely cited fewer tender opportunities, rising competition for new work and a projected headwind from subdued business investment during the year ahead.”

Rection to the latest figures was underwhelming with Gareth Belsham, director of Bloom Building Consultancy, saying: “Even the most optimistic of builders would struggle to declare the glass half full.

“Yes, the overall contraction in industry workloads continues to ease and housebuilders even saw output rise in June. That’s the good news.

“But on the other side of the ledger, commercial sector workloads fell sharply [and] infrastructure and civil engineering work contracted even more rapidly.

“The real cause for alarm is the continued decline in new orders - as they are the key to where the industry goes from here. Builders’ order books have got progressively thinner every single month in 2025 so far, and this is taking a severe toll on construction industry sentiment.”

And Lloyds Bank’s Max Jones, director of infrastructure and construction, said: “Businesses may be hoping that the government’s new infrastructure strategy generates momentum.”

Business expectations for the year ahead cooled in June, with 34% of the survey panel anticipating a rise in output, while 18% expect a decline – the lowest degree of optimism since December 2022.