Construction companies are battling to return to growth, according to fresh data, as increasing numbers of executives express concern about a more challenging outlook.
The Labour administration is banking on a construction sector recovery to deliver 1.5m homes by 2030, as reported by .
Nevertheless, a recent survey has cast doubt over whether Labour can meet its bold objective, given declining employment, reduced activity, and diminished optimism throughout the sector.
S&P Global's most recent purchasing managers' index (PMI) figure has indicated that construction has been contracting for eight straight months.
In contrast, official statistics published by the Office for National Statistics have demonstrated the construction industry enjoying stronger-than-anticipated growth, with output expanding by 1.2 per cent during the year's second quarter.
However, S&P Global's poll of approximately 150 businesses also revealed that commercial confidence had dropped to its weakest point since December 2022.
Companies highlighted pressures on wage budgets as they continued grappling with elevated national insurance contributions (NICs) following last year's Autumn Budget tax offensive.
Executives also noted that "intense price competition" was hampering expansion.
The civil engineering subsector was pulled lower by activity throughout the industry, the data indicated. Thomas Pugh, chief economist at RSM º£½ÇÊÓƵ and Ireland, said: "Despite the warmest summer on record and below average rainfall, the construction industry still appears to be lagging well behind the services sector.
"Indeed, the continued weakness in the housing and civil engineering balances points to the difficulty that the government has had in turning its rhetoric on housebuilding and infrastructure investment into reality on the ground."
Steven Mulholland, CEO of the Construction Plant-hire Association, described the figures as a "stark warning" that construction firms are "being pushed to breaking point".
"Construction should be driving growth, not suffering the consequences of poorly thought-through tax and regulatory changes," he said.
Construction battles to establish solid growth
This emerges as the Mineral Products Association (MPA) indicated cement production reached its lowest point since 1950 in 2024 whilst ready-mix concrete sales plummeted to historic lows during the second quarter of this year.
Sector experts suggested it places Labour's infrastructure ambitions at heightened risk of collapse.
"Cement is an essential industry, but the sector is increasingly under threat," said Dr Diana Casey, executive director for cement and lime at the MPA.
"Cement quite literally underpins the nation's growth and we can't deliver new homes, schools, hospitals, transport links or clean energy infrastructure without it.
"The º£½ÇÊÓƵ has a choice: to build these vital development projects with º£½ÇÊÓƵ-made cement, or to build them with imports – sending jobs, investment and economic growth overseas."
Offering some potential respite for construction companies, businesses surveyed by S&P Global reported that product and material demand had reduced delivery times whilst procurement costs rose at their slowest rate since the beginning of the year.
