UK construction industry reports solid rise in activity for July

UK construction companies reported an increase in new business for the seventeenth consecutive period in July. As a result of the rise in new business, purchasing activity at UK construction companies also increased.

Input costs also rose for the eighteenth successive month according to the latest Purchasing Managers Index.

Of the three main construction sectors, civil engineering saw the biggest growth in new work while residential contracted for a second successive month. There was a slight increase in commercial activity.

Employment also fell back slightly during July.

Sarah Bingham, economist at Markit and author of the UK Construction PMI, said:

“July PMI data signalled that the UK construction sector entered the second half of the year in much the same way as the first half was concluded.

“Rates of growth for both new orders and activity were solid, but remained below long-run trends. Furthermore, employment fell for a second month running.

“Moreover, the subdued level of confidence regarding future business expectations reflects the challenging outlook for the UK economy, and therefore the construction sector.

“Subsequently, concerns over the stability of growth going forward, for private as well as public sector firms, are likely to hinder spending on construction projects and, ultimately, the expansion of the sector.”

Commenting on the report, David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said:

“It’s a case of ‘as you were’ for the UK construction sector this month with little change in the rate of activity growth since June.

“While the sector is battling against poor economic sentiment, high inflation and continued worries in the Eurozone, the sustained growth, albeit at a historically mild pace, has to be seen as a positive, especially compared to the fallback in the manufacturing sector.

“A continued rise in new orders suggests that activity should be supported in the near-term, but confidence regarding potential activity growth for the next year remains relatively subdued.