The IHS Markit/CIPS UK Construction Total Activity Index for August read 54.6, remaining well into the growth zone but easing significantly from a July reading of 58.1.
Higher levels of activity have been recorded in each of the past three months, but the latest expansion was the weakest over this period. All three categories of construction provided a weaker contribution to the headline index compared to July.
The rebound in housebuilding continued into August, with sub-sector housing index reading a healthy 60.7. By comparison, the reading for commercial work was a more subdued growth level of 52.5 and civil engineering returned a contraction reading of 46.6.
Total new business volumes increased for the third month running during August, but the rate of expansion remained only modest and slowed from July. Construction companies cited economic uncertainty and a wait and see approach among clients as limiting opportunities to secure new work.
Supply chain disruption continues to affect the sector, with inventory shortages and demand outstripping supply contributing to higher purchase costs. That meant overall input inflation was the highest since Spring 2019.
Survey respondents, however, were more positive about the longer term outlook, with 43% expecting a rise in output over the next year, opposed to 19% expecting a fall.
Employment levels continued to fall, with the rate of job shedding little improved over July and among the fastest rate over the last ten years.
Eurozone construction activity continued to be more depressed than the UK. The Eurozone construction PMI recorded another contraction reading in August (47.8), further into contraction than July’s 48.9. The sharpest decline was in civil engineering, followed by commercial, with house building only marginally down. France registered a drop after two months growth. Italy registered growth in August. Germany continued to see decline and at a sharper pace. Employment reduction eased in August, except in France where it accelerated. Input price inflation intensified. Overall sentiment across the Eurozone turned negative, with Italy the only major market continuing to be confident, although less so than July.