The UK construction sector contracted at a slower pace in May as the fall in new orders hit the slowest in four months, survey data from S&P Global showed on Thursday.

The construction Purchasing Managers' Index posted 47.9 in May, up from 46.6 in April. The indicator suggested the slowest reduction in output volumes since January.

House building was the weakest-performing segment in May amid ongoing reports of subdued demand conditions. Civil engineering also contracted the most in five months. Meanwhile, commercial work dropped at the slowest pace since January.

The survey showed that new work dropped again in May but at the least marked pace in four months. Respondents attributed the fall to delayed decision-making among clients and cutback to capital spending budgets.

Further, firms were reluctant to backfill vacancies amid a lack of new work to replace completed projects and pressure on margins from rising payroll costs. Consequently, employment declined at the fastest pace since August 2020.

Firms reduced their purchasing activity in response to lower workloads. Input buying decreased for the sixth straight month. This resulted in fewer pressures on supplier capacity and a subsequent improvement in delivery times.

On price front, the survey showed that a strong rate of input price inflation continued in May. However, cost pressures continued to drift down from the 26-month high.

Business activity expectations for the year ahead edged up to the highest since December 2024. Positive projections were attributed to hopes of a turnaround in housing market conditions, greater infrastructure work, and the impact of lower borrowing costs on client demand.

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