The UK's construction sector improved slightly in August, figures showed on Tuesday, but still recorded its second straight month of decline as new orders slowed significantly, according to Alliance News.
The headline seasonally adjusted S&P Global/Chartered Institute of Procurement UK construction purchasing managers' index inched higher to 49.2 in August from 48.9 in July. Despite the uninspiring performance, the reading came in ahead of market consensus, according to FXStreet, of 48.0.
However, any reading below the 50.0 mark indicates contraction in the sector.
"As was the case in July, civil engineering posted the sharpest decline in activity of the three monitored categories, seeing output fall markedly over the month. Commercial activity also declined, thereby ending a period of growth stretching back for a year-and-a-half. On a more positive note, activity on housing projects increased for the first time in three months, albeit fractionally," S&P explained.
Andrew Harker, economics director at S&P Global Market Intelligence, said the UK's construction sector could be in for a "challenging period".
"New orders slowed to a crawl, while concerns about the sector and the wider economy led to a drop in confidence," he said.
S&P noted new order growth was at its weakest since June 2020. This was pinned on customers holding back to avoid spiralling costs.
"Price and supply pressures showed further signs of easing as waning demand throughout the sector lifted pressure on suppliers," Harker continued. "Meanwhile, the main positive from the latest survey was a solid increase in employment. That said, hiring at least in part reflects an ongoing catch-up following the pandemic. If activity continues to fall, firms will likely soon feel that their staffing capacity is sufficient and pause hiring."
The construction PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies. The data was collected from August 12 to 30.