The S&P Global/CIPS UK Construction PMI — which measures month-on-month changes in total industry activity — recorded an overall drop in UK construction output in July 2022, with the index falling to 48.9 from June’s 52.6.

The survey calculates the direction of activity change compared to the previous month, based on a survey of around 150 construction companies, with index values of above 50 indicating an overall increase in activity, and values of below 50 signalling a general decrease.

This is the first time that total industry activity has fallen below the 50 no-change threshold for 18 months, and is the fastest rate of decline since May 2020.

While commercial construction did show a rise in activity, posting 52.3 in July, this growth was unable to counteract significant downturns in civil engineering and housebuilding activity.

•   Hilltop launches real estate funding and management platform
•   Insolvency risk threatens UK construction industry, according to new report
•   Built environment bodies make three-year commitment to improve EDI

The slowdown in the sector can be attributed to several factors, with survey respondents citing rising inflation, higher interest rates, and fragile consumer confidence as dampening client demand, with rising energy, fuel and transport costs causing business expenses to surge.

However, 42% of those surveyed anticipate output to climb in the year ahead.

Commenting on the report, Duncan Brock, group director at CIPS, said: "After several months of difficult conditions for builders, these challenges have now resulted in a contraction in construction.

"This disappointing result was felt across all the sectors, including housing which had demonstrated more resilience over the past couple of years, but fell for the second month in a row in July.

“However, it was civil engineering that fell the hardest and furthest; with fewer new orders in the offing, it may be some time before we see a rebound in this sector, bearing in mind the time lag of infrastructure projects.

"Job creation was healthy to complete work in hand, but the danger remains that should the UK economy turn unfavourable, this will affect job hiring and the development of key skills.

“A feather-like fall in prices may ease some of the pain as access to raw materials also improved, but prices at historically high levels will continue to hamper activity in 2023."