UK construction activity falls for fourth month, PMI shows

By David Milliken

LONDON (Reuters) -Activity in Britain's construction sector contracted for a fourth month in a row in April as new work dried up while cost pressures remained high, an industry survey showed on Wednesday, highlighting the headwinds faced by Britain's economy.

The S&P Global construction Purchasing Managers' Index edged up to 46.6 in April from 46.4 in March but remained below the 50 level that divides growth from contraction, as it has been since the start of the year.

"Domestic economic headwinds and hesitancy among clients led to a lack of new work to replace completed contracts," said Tim Moore, economics director at S&P Global Market Intelligence.

Many British businesses are waiting to see where the dust will settle since U.S. President Donald Trump unveiled a raft of tariffs on April 2 - including a surcharge of at least 10% on U.S. imports of goods from Britain.

The Bank of England is expected to revise down its growth outlook for 2026 when it releases new quarterly forecasts on Thursday, alongside a quarter-point cut in rates to 4.25%.

Commercial real estate work fell at the fastest pace since May 2020, which construction companies blamed on clients' greater nervousness about the economic outlook. The decline was only partly offset by a smaller fall in house-building.

Purchasing activity fell by the most in nearly five years, leading to shorter wait-times for deliveries, while staff numbers fell for a fourth consecutive month, albeit more slowly than in March.

Businesses noted higher labour costs as one reason for their reluctance to replace staff who left. Britain's minimum wage increased by nearly 7% in April and employers must also pay higher social security charges.

Overall cost inflation eased only slightly from March's pace which was the highest in more than two years.

"Survey respondents commented on rising prices paid for a range of raw materials, as well as efforts by suppliers to pass on greater payroll costs," Moore said.

The most recent official data showed construction output rose 0.4% in February to stand 1.6% higher than a year earlier.

(Reporting by David Milliken, editing by Andy Bruce)