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  • Writer's pictureGraham Rawlings

Construction work slows further as firms are hit by climbing costs

The S&P Global/CIPS construction purchasing managers’ index scored 49.2 in August, considered a decline in activity.


Activity in the UK construction sector has slowed for the second month in August as economists warn of trouble ahead for companies hit by rising costs and a considerable dip in demand.

The S&P Global/CIPS construction purchasing managers’ index (PMI) scored 49.2 in August, fractionally up from 48.9 in July but still below 50, meaning a decline.

Analysts had predicted a score of 52, which would have ultimately signalled growth, but this is not the case.

In fact, Not only did construction activity fall for the second month running, but a range of indicators from the survey pointed to further weakness ahead.

New orders have slowed to the degree that concerns about the sector and the broader economy have led to a drop in confidence.

Coupled with a sharp decline in the civil engineering industry activity, this dragged down the overall score for the second month of 2022.



A drop in commercial construction work, such as offices and hospitality buildings, has stopped a period of growth dating back a year and a half.

The fast-rising cost of materials and concerns over the inevitable issue of a broader economic downturn has impacted the sector and led to a drop in confidence among the businesses surveyed. Contractors are slowing the availability of projects, taking a staunch approach to where they put their efforts and, indeed, their budgets.



The cost of debt is climbing, and the construction sector is undoubtedly exposed to energy price rises as a heavy energy user.


However, the knock-on effect of reduced purchases meant less pressure on suppliers and consequently easing supply chain delays; contractors are now not struggling as much to fill the gaps.


 

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