Construction recovery starts to unwind

THE recovery in the construction sector lost momentum last month as companies warned of a lack of new work.

A closely watched survey of business activity sank in July, indicating the pace of growth slowed. IHS Markit’s purchasing managers’ index slipped to a reading of 54.6, from 58.1 in July. Any score higher than 50 signals expansion.

The industry accounts for about 6pc of Britain’s economy. Construction output collapsed by more than 40pc in March and April and since building sites began reopening in May, the path back to pre-pandemic activity levels has been long. The lockdown also weighed heavily on supply chains, leading to shortages of materials.

Constructors said “economic uncertainty and a wait-and-see approach among clients” had limited opportunities to secure new contracts. They also reported a further decline in staff numbers, although the rate of job shedding had “eased slightly” since July.

Firms reported an improvement in their outlook, with 43pc of respondents saying they expect a rise in output over the next year, compared to only 19pc predicting a fall.

Housebuilding drove growth, ahead of commercial activity and civil engineering, the latter of which recorded a fall in output.

The survey came as housebuilders rejected claims from housing charity Shelter that they are sitting on hundreds of thousands of unbuilt homes.

Shelter claims that 40pc of homes granted planning permission remain unbuilt. Housebuilders, however, said that its numbers included homes on sites with construction work ongoing.