UK May construction PMI 47.9 vs 47.2 expected

• Prior 46.6

The improvement in overall activity comes as both output and new orders fell at the slowest pace since January. However, employment conditions continue to stutter with job shedding accelerating by its fastest since August 2020. S&P Global notes that:

“The construction sector continued to adjust to weaker
order books in May, which led to sustained reductions in
output, staff hiring and purchasing. However, the worst
phase of spending cutbacks may have passed as total new
work fell at a much slower pace than the near five-year
record in February.

“Housing activity was the weakest-performing segment
in May as demand remained constrained by elevated
borrowing costs and subdued confidence. Commercial
work was close to stabilisation after a marked decline
in April, suggesting that fears about domestic economic
prospects have abated after the initial shock of US tariff
announcements.

“Output growth expectations across the UK construction
sector recovered to the highest so far in 2025. Survey
respondents mostly cited a general improvement in sales
projections as well as a potential tailwind from falling
interest rates over the year ahead.

“On the inflation front, stubbornly high input price
pressures were recorded in May, although the overall rise
in purchasing costs was the least marked for four months.
Many firms noted that suppliers continued to pass through
greater payroll costs.

“Rising wages, squeezed margins and subdued demand
weighed on construction employment, despite a brighter
outlook for business activity. Job shedding was the steepest
since August 2020, while subcontractor usage decreased to
the greatest extent for five years.”

This article was written by Justin Low at www.forexlive.com.