The latest S&P Global UK Construction PMI data for June shows that the construction sector remains under significant pressure, despite a slight improvement from the previous month. The headline Construction PMI increased to 38.4 from 38.2 in May, remaining well below the 50.0 threshold that separates expansion from contraction. While the pace of decline eased marginally, the data indicates that construction activity continues to contract across all major sectors.
Housebuilding remains the weakest area
For the fenestration industry, the most notable aspect of the latest release is the continued deterioration in residential construction.
House building registered an activity index of 35.9, representing the sharpest decline recorded so far this year. Survey respondents attributed weaker activity to subdued housing demand, elevated borrowing costs, and continued caution from developers. These conditions have resulted in fewer new projects entering the construction pipeline and slower progress on existing developments.
For window, door, and glazing manufacturers that supply the new-build housing market, this suggests demand is likely to remain under pressure in the short term. With fewer housing starts and slower build programmes, order books linked directly to residential development are expected to remain subdued.
Commercial construction shows relative resilience
Although commercial construction continued to decline during June, it remained the strongest-performing segment within the survey.
This relative resilience is significant because commercial developments often generate demand for higher-value façade systems, curtain walling, aluminium glazing systems and specialist architectural products. While activity remains below growth levels, a slower rate of contraction may indicate that commercial construction is stabilising more quickly than residential work.
For companies operating in the commercial fenestration market, this suggests conditions remain challenging but may be less severe than those affecting housebuilding.
Civil engineering weakness limits wider market confidence
Civil engineering recorded its steepest contraction since the early stages of the pandemic, reflecting delays to infrastructure projects and fewer public sector tender opportunities. Although civil engineering does not directly drive window and door demand to the same extent as residential or commercial construction, prolonged weakness affects confidence throughout the wider construction supply chain.
Reduced infrastructure spending can influence contractor workloads, investment decisions and employment across construction, creating a more cautious operating environment for manufacturers supplying multiple sectors.
New orders remain in decline
One of the more encouraging aspects of the latest survey is that the decline in new business eased compared with previous months.
Although new orders continued to fall, the rate of decline was the slowest for three months. Some firms reported recent contract awards and tentative improvements in enquiry levels. However, overall demand remains weak, with clients continuing to delay investment decisions amid economic uncertainty and higher financing costs.
For the fenestration sector, this indicates that while activity remains subdued, the pace of deterioration may be slowing. Businesses heavily exposed to new-build markets will be watching future PMI releases closely for evidence that enquiries are beginning to convert into sustained project activity.
Cost pressures begin to moderate
The survey also points to a moderation in input cost inflation. Although material costs continue to rise, the pace of inflation has eased from the elevated levels seen in previous months. Supply chain performance also improved, with vendor delivery times lengthening only marginally.
For manufacturers and installers, slower cost inflation could help improve pricing stability and support margin management, particularly where competitive market conditions have limited the ability to pass on higher costs to customers.
Employment continues to weaken
Construction firms continued to reduce staffing levels during June as lower workloads and weaker order books prompted further cost-saving measures. Ongoing reductions in employment reflect expectations that activity is unlikely to recover quickly.
Labour market weakness has broader implications for the supply chain. Reduced recruitment and lower subcontractor demand typically accompany weaker construction output and can delay investment decisions throughout manufacturing and distribution.
Business confidence improves cautiously
Despite current market conditions, the survey found that business optimism improved to its highest level for several months. Respondents cited expectations of improving market conditions, new contract awards, and hopes of stronger activity over the coming year. However, confidence remains below long-term averages, reflecting the continued uncertainty surrounding interest rates, housing demand and business investment.
What this means for the fenestration sector
The June PMI suggests that trading conditions for much of the UK fenestration sector are likely to remain challenging over the coming months, particularly for businesses with significant exposure to residential new-build housing.
Commercial markets continue to offer comparatively greater resilience, while easing cost inflation may provide some operational relief. However, continued contraction in overall construction activity, falling employment and subdued project pipelines indicate that demand across much of the sector is unlikely to recover rapidly.
The slight improvement in the headline PMI and slower decline in new orders may represent early signs that the rate of contraction is beginning to ease rather than signalling an immediate return to growth. Future PMI releases will therefore be important indicators of whether stabilisation develops into a broader recovery for construction and, by extension, the UK fenestration industry.
Discover the data here: https://www.pmi.spglobal.com/Public/Home/PressRelease/54011bdef342414c814371c370a46b5d
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As predicted, there will be a considerable decline this year. Soon, obeying economic cycles, property prices will fall.
This will cause so real challenges to glazing businesses.
At the National Federation of Glaziers we will support our members through best advice to see them through this very challenging time.