UK construction output has fallen for the sixth consecutive month, according to the latest PMI report.

Reduced commercial and civil engineering work was offset by a rise in housing activity, but optimism across the industry dipped to the lowest level since December 2022 amid a sustain fall in new orders.

At 48.8 in June, the headline S&P Global UK Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index tracking changes in total industry activity – was up from 47.9 in May and signalled the slowest decline in construction output since the current period of contraction began in January.

But any reading below 50.0 indicates an overall reduction in construction activity.

The marginal decline in construction output during June reflected accelerated rates of contraction in the commercial and civil engineering sectors.

Commercial work decreased at the fastest pace since May 2020 (index at 45.1), which survey respondents attributed to subdued UK economic conditions and cutbacks to investment spending among clients.

Civil engineering (44.2) fell for the sixth month running and was the weakest-performing area of construction activity.

House building was the only category of construction work to expand in June (50.7).

Higher levels of residential activity were recorded for the first time since September 2024, although the rate of growth was only marginal.

Some firms commented on an upturn in new projects and sales pipelines.

However, new order books across the construction sector as a whole deteriorated for the sixth successive month in June, with the rate of decline accelerating since May.

Survey respondents commented on fewer tender opportunities and intense competition for new work, reflecting weak overall demand conditions and heightened risk aversion among clients.

Mirroring the trend for new work, latest data indicated a sustained downturn in staffing numbers. Construction companies have recorded cutbacks to employment throughout the year to date. This was again linked to lower demand and efforts to reduce overheads.

Business expectations for the year ahead moderated in June. Around 34% of the survey panel anticipate a rise in output, while 18% expect a decline.

This pointed to the lowest degree of optimism since December 2022. Anecdotal evidence suggested that subdued sales enquiries and worries about the UK economic outlook had weighed on business confidence.

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. Commercial activity fell at the sharpest rate in just over five years.

“On a brighter note, house building was the best performing area of the construction sector. Higher levels of residential work were recorded for the first time since September 2024 amid some reports of more stable demand conditions.”

Brian Smith, head of cost management and commercial at AECOM, said the latest data showed the sector remained “under pressure” as it works to rebuild momentum after a subdued start to the year, shaped by tight market conditions and a cautious investment climate.

He added: “But recent policy clarity will help set the sector on a more stable course.

“Clarity on capital investment, infrastructure spending and transport upgrades illustrate the intended direction of travel, while the new 10-year Infrastructure and Industrial Strategies outline the roadmap for getting there. Together, they should give contractors and clients greater certainty to plan, procure and deliver growth.

“Crucial now is the detail on private finance. New funding models will be vital if we are to accelerate delivery and unlock the UK’s infrastructure ambitions. The fact that the government has set out its intentions to develop a new approach to public-private partnerships is therefore hugely welcome.”