Activity in the UK housebuilding sector dropped for the first time since the beginning of pandemic, when the country was in the teeth of the most onerous pandemic restrictions, S&P Global’s final purchasing managers’ index (PMI) for June shows.

The data reveals that housebuilding, which has propelled the UK’s construction industry over the last two years, was the weakest-performing area of construction activity for the fourth month running in June.

The housing sector posted a reading of 49.3 last month, below the 50.0 no-change mark, signalling the first drop in residential building work since May 2020.

Tim Moore, economics director at S&P Global Market Intelligence economics director, said: “The gloomy UK business outlook and worsening consumer demand due to the cost of living crisis combined to put the brakes on construction growth in June.

“Housebuilding has expanded more quickly than the rest of the construction sector over the course of the pandemic, but now finds itself as the worst-performing broad category so far in 2022. Moreover, the latest survey indicated an outright decline in residential work for the first time in just over two years.

“Construction companies appear braced for a difficult second half of the year as new order growth and business activity expectations fell again in June, reflecting inflation concerns, higher interest rates and less favourable domestic economic conditions.”

Each passing month sees the flow of new orders slow further and more warning lights come on, according to Gareth Belsham, director of the national property consultancy and surveyors Naismiths.

He commented: “Housebuilders, once the poster children of Britain’s post-pandemic construction boom, have been at the back of the class for four months in a row. Residential construction is now contracting for the first time since the darkest days of the first lockdown in 2020.

“Housebuilding is more directly exposed to consumer confidence than any other construction sector; and it’s clear that some residential developers are easing off the gas pedal in response to the slowing economy and rising cost of mortgages.

“While output is still climbing in infrastructure and commercial property building, the pace is slowing steadily – and overall expansion is now weaker than it has been at any time since last September.

“With some firms struggling to find new orders to replace completed work, business confidence is starting to flail – and it has now fallen for five months in a row. Barely a third of construction firms expect business activity to rise in coming months, with sentiment a shadow of what it was during last year’s surge in work.

“Nevertheless many contractors are actively recruiting new staff – a hint at optimism for the future – and while the prices of raw materials are still rising painfully fast, availability is improving and project delays are easing.

“The first half of 2022 has been challenging to say the least, and with the twin risks of inflation and insolvency looming ever larger, the second half could be even tougher.”