UK and European buyers report fall in construction activity in June

The S&P Global Eurozone Construction Purchasing Managers’ Index (PMI) found that there was a “marked” fall in activity across the month.

The index scored 42.8 in June, after registering 43.7 in May (where anything less than 50.0 indicates a decline in activity).

New orders also declined although the pace of reduction was the slowest since February.

Output fell across all three segments (residential building, non-residential building, and civil engineering), led by declines in housing.

S&P Global Eurozone Construction PMI by industry segment (Image: S&P Global)

Activity also fell across all three of the largest Eurozone economies, led by an accelerated decline in France. Companies in Italy also recorded a stronger downturn in June.

Germany was the only monitored economy to see the pace of contraction ease from May.

Commenting on the weak performance, Usamah Bhatti, economist at S&P Global Market Intelligence noted some cause for optimism, however.

“There were some tentative positives in the June data. New orders fell at the softest pace in four months, while the lengthening of lead times was the least marked for three months amid positive developments regarding the war in the Middle East. In turn, the rate of input cost inflation eased further from April’s recent peak, as all three monitored countries reported softer increases in cost burdens and signs of easing raw material prices,” he said.

UK remains subdued but business expectations recover

In the UK, buyers reported further sharp declines in output and new orders during June although both eased from May’s six-year records.

The S&P Global UK Construction PMI registered 38.4 in June, up slightly from 38.2 in May. Construction activity has decreased in each month since January 2025 and the decline in June was the second-fastest since the start of the pandemic.

Housebuilding activity scored 35.9, while civil engineering fell to the greatest extent since April 2020, registering a score of just 22.1.

Commercial construction was the best-performing category at 41.5.

S&P Global UK Construction PMI by industry segment (Image: S&P Global)

Buyers blamed subdued housing market conditions, higher borrowing costs, elevated business uncertainty, and delayed project starts.

They also reported sharp increases in cost burdens, including higher raw material prices, staff wages, and transportation, although the seasonally adjusted index pointed to the slowest pace of inflation for three months.

There was also some optimism among UK buyers, with 38% expecting an increase in business activity over the year ahead, compared to 19% who predict a decline.

Tim Moore, economics director at S&P Global Market Intelligence, said, “Supply chain challenges appear to have receded, with vendor delivery times lengthening to the smallest degree since March. Construction companies also reported a slowdown in input price inflation from the near four-year peak seen in May.

“June data indicated a recovery in business activity expectations across the construction sector since May, although confidence levels remain well short of historic trends. A number of survey respondents suggested recent new contract awards and an expected improvement in broader market conditions had underpinned optimism.”