FTSE 100 stalls as housebuilding slump drags construction sector deeper
The FTSE 100 opened flat while investors digested a fall in the construction PMI and a slight dip in UK gilt yields ahead of US jobs data.
FTSE 100 opened the day on a modest note on Friday, with the index hovering near its previous close as markets braced for the US employment report and processed fresh data pointing to a deepening slump in the UK construction sector.
Yield on the 10‑year British gilt slipped to 5.15%, offering a small reprieve after a global bond sell‑off that had threatened to dominate headlines. The move came as Federal Reserve Governor Christopher Waller hinted the Fed may pause rate hikes, easing pressure on US Treasury yields.
Construction sector under pressure
According to S&P Global, the UK Construction PMI slipped to 44.3 in August from 44.7 the month before, signalling contraction. The decline was driven largely by a sharp slowdown in housebuilding, with listed developers cutting profit forecasts and scaling back completion targets.
"concerns over demand for private residential activity continue to weigh on sentiment," said Kelly Boorman, head of construction at audit firm RSM UK. "Further government initiatives to help boost private residential demand, such as first‑time buyer incentives, would therefore be welcome by the sector, and could go a long way to easing some of the pressures faced by housebuilders."
Industry voices are urging the government to consider measures that could stimulate first‑time buyer activity, echoing broader debates about fiscal stimulus and growth.
Market reaction and outlook
Oil prices held steady, with Brent crude slipping about 0.2% but staying above $95 a barrel, keeping energy‑related stocks relatively stable.
Looking ahead, investors will watch the US jobs numbers for clues on the Fed’s next move, while the construction slowdown may keep pressure on the FTSE 100 if housebuilder earnings continue to be revised downwards. Analysts suggest that without a policy push to revive residential demand, the sector could remain a drag on broader market performance.
For a deeper look at how government spending may affect growth, see Healey’s adviser warns spending won’t drive UK growth.
