An economic report showed that activity in Britain's housing construction sector has fallen to its lowest level since the end of the COVID-19 pandemic and the global financial crisis 14 years ago, amid a sharp rise in interest rates on mortgage loans.
The construction sector in Britain has declined.
S&P Global Economic Consulting said the UK housing construction purchasing managers' index (PMI) fell last month to 42.7, its lowest level since May 2020 when the construction sector was paralyzed by the impact of the COVID-19 pandemic. Excluding the pandemic period, the index has fallen to its lowest level since the global financial crisis of early 2009.
This comes as overall construction activity in Britain rose last month, with the sector's Purchasing Managers' Index (PMI) climbing to 51.6 from 51.1 in April, driven by increased construction activity in commercial buildings and civil engineering projects. The median forecast of analysts surveyed by Bloomberg was 50.8.
Growth of economic activity
An index reading above 50 points indicates growth in the sector’s economic activity, while a reading below 50 points indicates contraction in activity.
Meanwhile, the slowdown in housing construction is the clearest indication yet that developers are responding to the weak property market by scaling back their activities. Last week, the Building Society reported that UK house prices fell at their fastest rate in 14 years in May, driven by a drop in demand due to high interest rates.
