UK construction output fell for the first time in 18 months this July, new data from CIPS UK shows.

Its latest construction purchasing managers index reports the headline figure falling from 52.6 in June to 48.9 on the month.

While civil engineering was the worst performing area overall, house building fell for the second consecutive month (albeit only slightly, to 49.4), while commercial work was the only segment that saw a rise – again, only slightly, with the weakest growth here in 18 months.

Rising inflation and “fragile” consumer confidence, along with higher interest rates were cited as factors in this.

The report adds that employment numbers grew in July, with “many reports” of problems filling vacancies.

While inflation was named as a factor for weak performance, purchase price inflation did fall, from 85.8 in June to 78.1 in July, with metals and timber prices dropping – but energy and transport costs remain a problem.

Growth expectations, the report says, are “well below” those seen at the start of 2022, although this is improved on June’s 23—month low.

Naismiths director Gareth Belsham says: “So far it’s a retreat rather than a rout, but it’s hard to sugarcoat these disappointing figures.

“Ebbing confidence and months of gradually slowing momentum have finally tipped the construction sector into contraction territory for the first time since the lockdown affected days of January 2021.

“That said, today’s report isn’t devoid of good news. The formerly runaway inflation in building material costs has slowed as prices ease for some key commodities such as metals and timber, and building firms continue to hire more staff.

“Rising interest rates will make some developers reassess their plans and will eventually cool demand from house buyers too.

“No-one is breaking out the ‘end is nigh’ sandwich boards yet, but the growth days are over for now – and the industry is digging in for a tough second half of the year.”