UK construction sector growth slows in August

According to the report from IHS Markit/CIPS, August data pointed to a setback for the recovery in UK construction output, with growth easing from the near five-year high seen during July. Survey respondents mostly suggested that a lack of new work to replace completed contracts had acted as a brake on the speed of expansion.

The headline seasonally adjusted UK Construction Total Activity Index registered 54.6 in August, down from 58.1 in July. Any figure above 50.0 indicates growth of total construction output. Higher levels of activity have been recorded in each of the past three months, but the latest expansion was the weakest over this period. All three broad categories of construction provided a weaker contribution to the headline index in comparison to those seen in July.

House building has registered the strongest rebound since the stoppages of work on site in late-March due to the coronavirus disease 2019 (COVID-19) pandemic. This trend continued in August, with the seasonally adjusted Housing Activity Index posting well inside expansion territory (60.7). The equivalent figures for commercial work (52.5) and civil engineering activity (46.6) were notably weaker than the headline index in August. Total new business volumes increased for the third month running during August, but the rate of expansion remained only modest and slowed since July.