The construction sector continued to face significant challenges in June, with job losses mounting for the 18th consecutive month amid a sharp decline in house building activity. Industry data showed that new build projects have slowed markedly, contributing to sustained layoffs across the sector.

According to a monthly survey conducted by S&P Global, the construction industry’s activity index rose slightly to 38.4 in June from a six-year low of 38.2 in May. However, the figure remains well below 50—the threshold indicating expansion—signaling ongoing contraction. House building, a key component of the sector, registered a particularly steep drop, with its activity index falling to 35.6.

Tim Moore of S&P Global attributed the continued weakness to several factors, including subdued housing sales, elevated interest rates, and tight consumer finances, all of which have dampened demand for new homes. Additionally, businesses have reduced their investment plans, further curbing activity. Sub-contractors have also felt the impact, facing fewer new orders amid an increasingly competitive environment for what projects remain available.

Moore noted that anecdotal evidence from industry participants pointed to a combination of declining new build home sales and cautious business investment as primary drivers of the slowdown, compounded by heightened competition to secure contracts.

The construction industry downturn comes against the backdrop of proposed government plans to stimulate house building. Andy Burnham, the likely incoming Prime Minister, has pledged to launch the “biggest council house building programme since the post-war period,” aiming to counter the current slump and address long-standing housing shortages. How quickly and effectively this initiative could influence the struggling sector remains to be seen.