The UK construction industry continued to face challenges in August, as shown by the S&P Global UK construction Purchasing Managers' Index (PMI), which dropped to 44.3 from 44.7 in July. The PMI is a key indicator used to gauge economic activity in a sector, with readings above 50 signaling growth and those below 50 indicating contraction. This latest figure shows that the construction sector has been in contraction mode since January 2025, and it was lower than the 46 level that economists had predicted. According to Tim Moore, economics director at S&P Global Market Intelligence, the main reason for the weaker performance in August was a faster decline in house building. The residential construction sector, which includes the building of homes, saw a sharp and accelerated drop in activity. This decline was significant enough to outweigh the slower rate of decline in other areas such as commercial construction and civil engineering, which involve building structures like offices and infrastructure projects. Surveyed construction firms reported being affected by lower demand and fewer new projects, particularly in the housing sector. While all sectors saw a reduction in new orders, the decline was the slowest since September of last year. Thomas Pugh, chief economist at RSM UK, highlighted that this is the 20th consecutive month of sub-50 PMI readings, showing that the sector is struggling under several pressures. These include higher energy prices, increased interest rates, and ongoing uncertainty about changes to planning regulations that affect construction projects. Even though the summer months usually see a boost in construction activity, the latest data shows output has fallen for three months in a row. Pugh added that there are few signs of immediate improvement for the construction sector, as weaker real income growth and a sharp increase in mortgage rates continue to dampen demand. These factors are likely to keep the sector under pressure in the near future.