T
he UK’s building sector returned to progress in July as an uptick in business work offset sharp falls for residential housebuilding, as rate of interest rises and cost-of-living pressures dealt a “hammer blow” to the housing market, an influential survey has discovered.
Builders noticed supply occasions shorten on the quickest fee final month since 2009.
The newest S&P Global/CIPS building buying managers’ index scored 51.7 in July, up from 48.9 in June and the very best degree for 5 months.
Any rating above 50 signifies the sector is rising, whereas a rating under means it’s contracting.
The uplift final month was pushed by business constructing exercise, reminiscent of constructing places of work for company corporations, and civil engineering work which continues to indicate a powerful efficiency.
But residential housebuilding recorded its eighth month in a row of decline, the survey discovered.
Construction corporations mentioned that rising borrowing prices led to fewer gross sales inquiries and slower decision-making amongst clients in July, because the affect of upper rates of interest deepens a slowdown throughout the housing market.
Dr John Glen , chief economist on the Chartered Institute of Procurement & Supply (CIPS), mentioned: “Although the sector showed a slight uplift in activity in July, there is a question mark over the sustainability of this growth and the challenges that lie beneath the floorboards.
“Decisions about buying a new home are being delayed by many consumers.
Although the sector showed a slight uplift in activity in July, there is a question mark over the sustainability of this growth and the challenges that lie beneath the floorboards
“Another fall in residential building levels and for the eighth month in a row, it’s obvious that UK interest rate rises and cost of living pressures have dealt a hammer blow to the housing sector.
“The commercial and civil engineering sectors remained the only engines of growth last month.”
But in a vivid spot among the many information, weaker demand for constructing work and fewer provide bottlenecks meant supply occasions shortened to the best extent since March 2009.
Cost pressures additionally eased for some building corporations, however others reported that still-high inflation and better wage prices have been nonetheless pushing up buying costs.
Resilient demand from corporates is stopping a pointy downturn in total building output
Businesses reported feeling typically optimistic about exercise for the 12 months forward. But the survey flagged that budgets being squeezed by larger rates of interest is anticipated to carry again progress throughout the sector.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, mentioned: “Resilient demand from corporates is preventing a sharp downturn in overall construction output.
“Corporates under-invested throughout the years of Brexit uncertainty and the Covid crisis, and therefore have entered this period of monetary tightening with relatively little debt, excess cash, and a wide range of capital projects that still are profitable to undertake even with higher borrowing costs.
“It’s still too soon to talk of a recovery in the construction sector – new orders are simply flat – but with the bank rate likely near its peak and supply chain issues having been resolved, it’s increasingly looking like a sharp sector-wide downturn has been avoided.”
