UK housebuilding activity returned to growth in June for the first time in nine months, as the downturn across the construction sector showed signs of easing, a new survey shows.
But optimism among builders weakened as economic worries clouded the outlook for the future.
The latest S&P Global construction purchasing managers’ index (PMI) showed a reading of 48.8 last month, improving from 47.9 in May.
Any reading above the 50 threshold indicates that activity in the industry is increasing while anything below means it is shrinking.
The latest score indicates that construction activity contracted further in June, but the rate of decline was the slowest in six months.
Housebuilding was the best-performing area of the industry last month, with residential activity returning to growth for the first time since September, albeit marginally.
It follows a boost to the housing industry in recent months as first-time buyers raced to complete purchases before stamp duty relief was cut in April, and UK interest rates have been cut to the lowest level in two years.
Furthermore, many large housebuilders have welcomed the Government reintroducing housing targets and taking steps to reform the planning system to reduce bottlenecks.
It has also allocated £39 billion to social and affordable homes over the next decade.
On the other hand, commercial work – such as offices, shops and warehouses – fell at the fastest pace in five years in June, according to S&P Global’s survey.
Construction firms attributed the decline to tougher economic conditions and businesses cutting back on investment plans.
Civil engineering work also fell for the sixth month in a row and was the worst-performing part of the sector.
Meanwhile, optimism among businesses sank to the lowest level in two-and-a-half years amid concerns that demand was waning and competition for new work was intensifying.
This also helped drive more cutbacks to staffing among construction firms last month, the survey showed.
Tim Moore, economics director at S&P Global Market Intelligence, said: “June data highlighted a sustained downturn in UK construction output, albeit at the slowest pace in six months.
“Shrinking workloads in the commercial and civil engineering segments weighed on total industry activity.”
“On a brighter note, housebuilding was the best-performing area of the construction sector,” he said, adding that residential work was boosted amid “reports of more stable demand conditions”.
