July\u2019s 44.3<\/a>, but still far below the neutral 50.0 threshold.<\/p>\nNumbers below 50.0 indicate decline, while numbers above 50.0 show growth.<\/p>\n
Some sectors had a better August than others<\/h3>\n
Commercial building had an index of 47.8, the smallest decline in 3 months, indicating resilience, but a decline nonetheless. Residential construction, on the other hand, dropped to 44.2 in the sharpest fall since February. The lowest indexed sector by far was civil engineering at 38.1 and its fastest drop since October 2020.<\/p>\n
Both new work and employment dropped, with new work declining at the slowest pace since January, but employment dropping at the fastest rate since May. Survey respondents cite market conditions, price competition, and UK economic activity causing the need for hiring freezes and cost-cutting moves.<\/p>\n
Optimism, as a result, is at its lowest since December 2022, with only 34% of surveyed firms expecting growth in the coming year, and 22% expecting worsening conditions.<\/p>\n
Tim Moore, economics director at S&P Global Market Intelligence, said: “Construction activity has decreased throughout the year to-date, which is the longest continuous downturn since early-2020. August data signalled only a partial easing in the speed of decline after output fell at the fastest pace for over five years in July.<\/p>\n
“Sharply reduced levels of housing and civil engineering activity were again the main reasons for a weak overall construction sector performance. Commercial work showed some resilience in August, with the downturn the least marked for three months.<\/p>\n
“There were some positive signals on the supply side as vendors’ delivery times shortened, subcontractor availability improved and purchasing price inflation hit a ten-month low. However, easing supply conditions mostly reflected subdued demand and a lack of new projects.<\/p>\n
“Elevated business uncertainty and worries about broader prospects for the UK economy meant that construction sector optimism weakened in August. The proportion of panel members expecting a rise in output over the year ahead was 34%, down from 37% in July and lower than at any time since December 2022.”<\/p>\n
Industry reactions<\/h3>\nGareth Belsham, director of Bloom Building Consultancy<\/h4>\n
\u201cThings have gone from bad to worse for housebuilders, with residential construction output falling at its fastest rate since February.<\/p>\n
\u201cThe rate of decline is more modest in commercial building construction, but this one bright note can\u2019t mask the overall slowing in the industry.<\/p>\n
\u201cOfficial data from the ONS ranked construction as the fastest growing sector of the economy in the second quarter of 2025, but the PMI data suggests momentum is patchy at best.<\/p>\n
\u201cMost worrying of all is the slowing pipeline of new work. New orders have fallen for eight months in a row, and while contractors tend to book projects months in advance, even big names are starting to see their order books thinning out.<\/p>\n
\u201cLittle wonder contractor sentiment is weak and many construction firms are either laying off payrolled staff or freezing recruitment. While some of this can be attributed to the increase in employer National Insurance contributions introduced earlier this year, the use of subcontractors also fell sharply in August.<\/p>\n
\u201cNone of this speaks to an industry full of confidence. Just a third of the contractors interviewed for the PMI survey expect output to improve over the next year – a lower proportion than at any time since December 2022.<\/p>\n
\u201cYet there are a few glimmers of hope. Last month\u2019s reduction in the Bank of England base rate should bring some relief to contractors grappling with high levels of debt, and make finance more affordable for developers.<\/p>\n
\u201cAnd while Deputy Prime Minister Angela Rayner\u2019s plan to get 1.5m new homes built by 2029 is likely to join Whitehall\u2019s growing list of Quixotic housebuilding targets, the stability of the commercial construction sector is welcome. Commercial schemes with a clear business case and robust costings are still being approved, but developers and investors are cautious, and value is key.\u201d<\/p>\n
Jordan Smith, regional director at Thomas & Adamson, part of Egis Group<\/h4>\n
\u201cAlthough August\u2019s PMI reading shows a slightly slower pace of decline than July\u2019s five-year low, the construction sector continues to contract rather than grow, meaning it is a challenging market for everyone to navigate through. Reductions in housing and civil engineering sectors continue to be experienced; however, commercial projects have offered some resilience as we have seen first-hand as we are actively engaged on a number of commercial and workplace schemes.<\/p>\n
\u201cWith the Bank of England\u2019s interest rate being cut to 4% in August, the cost of borrowing is at the lowest level for more than two years, so there is cause for optimism that signs of movement could be on the horizon as the cost of finance becomes slightly more attractive to developers. This all helps with viability of potential projects, together with other positive emerging signs such as steadying of purchase prices and shorter lead times for materials, which we hope to see sustained as activity picks up towards the end of 2025.<\/p>\n
\u201cWhilst the data also notes a freeze on new hires, this is not necessarily the case across the board. Thomas & Adamson and the wider Egis Group are committed to recruiting and developing the next generation of talent within our businesses, and have several new hires on the horizon.<\/p>\n
\u201cThe Scottish Government has this week announced a fresh commitment to invest \u00a34.9bn in new homes over the next four years. This should hopefully create new momentum north of the border, and be reflected in the data seen throughout the remainder of the year.\u201d<\/p>\n
Max Jones, director of infrastructure and construction at Lloyds<\/h4>\n
\u201cCivil engineering and public infrastructure projects have helped to balance softer demand elsewhere in the market, and there have been some notable examples of commercial projects moving ahead, helping to bring some stability to pipelines.<\/p>\n
\u201cAlthough firms are still facing relatively high materials prices, overall cost pressures have eased compared to earlier in the year, supporting hopes that momentum could build as we enter Autumn.\u201d<\/p>\n
\n<\/div>","protected":false},"excerpt":{"rendered":"
The PMI for August 2025 shows that, despite a minor recovery in activity, the industry is still in decline overall, with confidence tanking.<\/p>\n","protected":false},"author":32,"featured_media":154862,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[908,974],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-154861","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-planning-construction-news","8":"tag-economy","9":"tag-pmi"},"acf":[],"yoast_head":"\n
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