- Construction PMI 38.2 vs 40.2 expected
- Prior 39.7
Ouch. That’s a terrible reading as things are just getting worse for UK’s construction sector in Q2. The estimate indicates that construction output fell at its sharpest pace since May 2020. And if you discount the drop during the Covid pandemic, this marks the steepest decline in activity since March 2009.
The decline was broad-based with residential activity (36.0) being the weakest performing segment. Commercial construction (39.0) also saw a steeper reduction
in output levels in May while civil engineering work (36.2) continued to fall but at least at a slightly
less marked rate than in April.
Construction firms noted that
project delays, deferred investment decisions and general
cutbacks to clients’ budgets had all resulted in fewer tender
opportunities. Some firms also suggested that domestic political
uncertainty had also impacted demand conditions in May.
Looking to price pressures, the conditions are pretty rough. Input prices continued to surge higher with the pace being at the quickest since June 2022. At the same time, supply delays continue to ramp up as the disruption from the Middle East conflict continues to reverberate. Of note, the downturn in vendor performance was the
sharpest since December 2022 amid widespread reports
of international shipping delays and some raw material
shortages.
Trouble, trouble.