Published by Global Banking and Finance Review
Posted on September 4, 2025
By David Milliken
LONDON (Reuters) -Activity in Britain's construction sector slowed for the eighth month in a row in August, extending its longest downturn since 2020 as optimism in the sector weakened, purchasing managers' data showed on Thursday.
The S&P Global Purchasing Managers' Index for Britain's construction sector rose in August to 45.5 from July's five-year low of 44.3. But it remained well below the 50-mark that divides growth from contraction, as it has since the start of 2025.
"Sharply reduced levels of housing and civil engineering activity were again the main reasons for a weak overall construction sector performance," said Tim Moore, economics director at S&P Global Market Intelligence.
The weakness stands at odds with a government goal to build 1.5 million homes over its five-year parliamentary term, a rate of construction not achieved since 1970.
Builders were also more downbeat about the outlook. The proportion of firms that thought volumes would be higher in a year's time sank to 34% in August from 37%, the lowest reading since December 2022.
Falling order books were blamed on a mix of "challenging market conditions, intense price competition and headwinds from sluggish UK economic activity," S&P said.
The gloom in the construction sector - which accounts for 6% of British economic output - contrasted with a more upbeat picture in the services PMI which saw the biggest rise in business activity since April 2024.
The all-sector PMI - which includes manufacturers as well - rebounded to 52.8 in August, its highest since September 2024, from 50.8 in July.
Official data showed Britain's economy outpaced other Group of Seven economies in the first half of 2025 - partly due to higher government spending and attempts by businesses to avoid incoming U.S. tariffs - but the outlook remains weak by historic standards.
(Reporting by David Milliken; Editing by Hugh Lawson)
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