Slide in construction output eases but jobs-cutting hits five-year high

The slide in construction activity eased last month but still remained stuck in reverse, new figures out this morning have said.

The S&P Global UK Construction Purchasing Managers Index hit 47.9 in May – up from the 46.4 record the month before – but still below the 50 no change mark. Any score below this figure means contraction.

The bellwether index said: “Output and new orders both fell at the slowest pace since January, while growth projections for the year ahead improved again.”

But it added job losses had accelerated to their fastest rate for nearly five years when the UK was coming out of the first covid lockdown.

Tim Moore, economics director at S&P Global, said: “Rising wages, squeezed margins and subdued demand weighed on construction employment. Job shedding was the steepest since August 2020, while subcontractor usage decreased to the greatest extent for five years.”

All three sectors covered by the index stayed in negative territory with housebuilding seeing its score worsen from 47.1 to 45.1 “amid ongoing reports of subdued demand conditions”. While civil engineering posted an improved score of 45.9, it was the fifth successive month of contraction.

But the one bright spot was commercial work which posted a score of 49.5, a rise from April’s figure, and close to the no change figure.

Aecom’s head of cost management Brian Smith said the modest improvement of the latest index showed the industry was slowly recovering. “All things point to a bright summer ahead,” he said. “[But] we must see a Spending Review [next week] that will bring prosperity and long-term direction for the sector.”

And Kelly Boorman, national head of construction at restructuring firm RSM, said the signs of improvement masked more persistent issues. “Activity remains subdued, with the index still below 50 and signalling contraction amid persistent labour shortages, rising employment costs, and growing uncertainty towards planning reform.”