Latest data released by Markit/CIPS - 6 August 2020

Construction activity is seen picking up further in July, mirroring the rebound seen in the manufacturing and services sector amid the easing of lockdown measures.

The growth is largely led by homebuilding, but the report highlights considerable risks with regards to employment conditions - the pace of job losses was quicker than in June.

Once again, that puts a lot of emphasis on labour market conditions in the coming months and how that will hold up. A further deterioration in employment down the road will dampen any prospects of a sustained and quick recovery in the UK economy.

Markit notes that:

"Construction companies took another stride along the path to recovery in July as a rebound in house building helped to deliver the strongest overall growth across the sector for nearly five years. Civil engineering and commercial activity are also back in expansion, which has been mainly due to the restart of work that had been delayed during the second quarter of 2020.

"Survey respondents noted a boost to sales from easing lockdown measures across the UK economy and reduced anxiety about starting new projects. However, new work was still relatively thin on the ground, especially outside of residential work, with order book growth much weaker than the rebound in construction output volumes.

"Concerns about the pipeline of new work across the construction sector and intense pressure on margins go a long way to explain the sharp and accelerated fall in employment numbers reported during July. This shortfall of demand was mirrored by the fastest rise in sub-contractor availability since November 2010 and another decline in hourly rates charged."