The UK’s construction sector expanded at its fastest pace in 26 months, according to new data on Tuesday.

The headline S&P Global UK construction purchasing managers’ index rose to 55.3 in July from 52.2 in June. This was ahead of FXStreet expectations, with markets expecting the reading to come in at 52.7.

Remaining above the 50.0 no-change mark for the fifth consecutive month, the latest reading signalled a sustained improvement in overall construction activity in the UK.

Further, S&P said the rate of expansion was the fastest since May 2022.

All three categories of construction saw activity increase in July as work on housing projects returned to growth.

‘Commercial activity increased solidly, but the fastest expansion was seen in civil engineering activity, where the rate of growth quickened to the sharpest in almost two-and-a-half years,’ S&P said.

Looking ahead, construction firms remained ‘strongly optimistic’ that activity will expand over the coming year, although sentiment dipped to a three-month low in July.

‘The election-related slowdown in growth seen in June proved to be temporary, with the pace of expansion roaring ahead in July. Firms saw the strongest increases in new orders and activity since 2022 as paused projects were released amid reports of improved customer confidence,’ said Andrew Harker, economics director at S&P Global Market Intelligence.

‘The strength of demand moved the sector closer to capacity, bringing a recent period of improving supplier performance to an end. There were also signs of inflationary pressures picking up, something that will need to be watched closely if demand strength continues in the months ahead.’

The construction PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies in the UK. Responses were collected between July 11 and 30.

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