Construction activity falls at steepest rate since lockdown

Activity in the UK construction sector fell last month at the sharpest rate since the height of the Covid pandemic amid a collapse in housebuilding, underscoring the challenge facing the government to meet its target of 1.5m new homes.

- Richard Partington

The figures from S&P Global Market Intelligence showed activity had fallen in July at the steepest pace since May 2020, during the first Covid lockdown.

The data provider said a sharp drop in residential building had pulled down its monthly purchasing managers index (PMI) for the UK construction sector as a whole, alongside a plunge in civil engineering and a softer downturn in commercial property.

Compiled from a survey of about 150 construction firms, the survey is closely monitored by the Treasury and the Bank of England for early warning signs from the economy.

Threadneedle Street is widely expected to cut borrowing costs today, with financial markets putting the odds of a quarter-point reduction at 95%, amid growing economic concerns.

Unemployment is rising, inflation is sticky, output shrank in April and May, and global trade is reeling from Donald Trump's latest round of punitive country-specific tariffs, which are due to come into force today.