In May the construction sector declined for the fifth consecutive month as many firms report a downturn in easing.
The sector recorded their fastest job cut since 2020 amid continued cost pressures as construction firms are feeling the pinch.
The latest S&P Global construction purchasing managers’ index (PMI) has a reading of 47.9 last month.
Tim Moore, economics director at S&P Global Market Intelligence, said: “The construction sector continued to adjust to weaker order books in May, which led to sustained reductions in output, staff hiring and purchasing.
“However, the worst phase of spending cutbacks may have passed as total new work fell at a much slower pace than the near five-year record in February.
“Housing activity was the weakest-performing segment in May as demand remained constrained by elevated borrowing costs and subdued confidence.”
Lauren Pamma, Head of Energy & Infrastructure at Aldermore Bank said, “Output may have dipped again this month, but today’s data signals the slowest reduction in output volumes since January – particularly in categories like commercial work and total new work – which is a welcome sign.
“There’s growing optimism that activity could rebound over the summer, with output growth expectations across the sector recovering to the highest so far in 2025, helped by last month’s interest rate cut, which may support longer-term growth.
“That said, the broader economic picture remains uncertain. As we edge closer to the end of the 90-day pause on the USA’s tariffs – and with inflation at a 12-month high – there is hesitation with many developers holding fire on new orders.
“The US’ plan to potentially double tariffs on steel and aluminium from 25% to 50% will be front of mind for businesses across the industry, and many will be waiting with bated breath to see if the UK’s trade deal with the US will be signed, offering protection from these higher tariffs, and avoiding further supply chain disruption and volatile pricing.
“If business confidence doesn’t pick up, more projects could be pushed back. The outlook is currently unclear and SMEs will be monitoring the geopolitical landscape over the coming days to see what the full impact on the construction sector will be.”
