Construction output shrank at its fastest rate for six years in May, which also marked the 17th consecutive month of contraction, according to the latest index from S&P.
The housebuilding sector was particularly weak, the data shows.
S&P Global Market Intelligence economics director Tim Moore says: “Anecdotal evidence suggested that economic uncertainty and rising inflation in the wake of the Middle East conflict had triggered the steepest drop in new work since the beginning of the pandemic.
“Elevated borrowing costs were also reported to have impacted market conditions.
“Fuel surcharges and rapid increases in prices for energy-intensive raw materials continued to be felt across the construction supply chain.
“Overall purchasing costs rose to the greatest extent since June 2022, while international shipping delays meant that suppliers’ delivery times lengthened for the third month running.”
Phoebus Software sales and marketing director Richard Pike believes planning reform is urgently needed.
He says: “Housebuilding remains firmly in contraction territory, following a fall in output for the seventeenth consecutive month, and the sector faces the fastest pace of input price inflation since June 2022.
“Weak demand, supplier issues and fragile client confidence have led to projects being delayed or stalled, and while activity may begin to stabilise, any improvement is likely to be gradual through 2026 as financing conditions ease.
“But beyond the economic pressures, this is increasingly becoming a question of delivery.
“The government’s housebuilding ambitions risk looking like another broken promise unless the structural barriers holding back development are tackled with urgency.
“Development funding is more available, lenders are active, and conditions are improving – yet projects are still not progressing at the scale needed.
“As the OECD highlighted in its latest UK economic outlook, an overhaul of the National Planning Policy Framework is essential.
“Without meaningful planning reform, any recovery seems a long way off.”
