Construction firms cut jobs at fastest rate since 2020 despite signs of recovery
However, business in the sector also recorded the sharp rate of job cutting since August 2020 in the face of continued cost pressures.
The latest S&P Global construction purchasing managers' index (PMI) showed a reading of 47.9 last month, improving from 46.6 in April.
It was ahead of the 47.2 reading predicted by economists.
Any reading above the 50 threshold indicates that activity in the industry is increasing while anything below means it is shrinking.
The latest figure meant the sector shrank further but saw its rate of decline slow down compared with the previous month.
Tim Moore, economics director at S&P Global Market Intelligence, said: 'The construction sector continued to adjust to weaker order books in May, which led to sustained reductions in output, staff hiring and purchasing.
'However, the worst phase of spending cutbacks may have passed as total new work fell at a much slower pace than the near five-year record in February.
'Housing activity was the weakest-performing segment in May as demand remained constrained by elevated borrowing costs and subdued confidence.'
Business in housebuilding reported a reading of 45.1 for the month as subdued demand caused the downturn in the sector to accelerate last month.
Civil engineering also reported a significant decline, with a reading of 45.9, while the commercial construction sector declined marginally, recovering to its strongest level since January.
Across the sector, surveyed companies said they were reluctant to backfill job vacancies because of a lack of new work and also increased payroll costs, linked to increases in national insurance contributions and the minimum wages.
As a result, the sector reported the fastest rate of 'job shedding' since August 2020, while subcontractor usage also dropped to a five-year-low.
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