As rate increases have a toll, UK housing construction drops yet again.

The housing market in Britain experienced a steep decline in July as a result of rising interest rates and concerns about the future of the economy, according to a poll released on Friday.

The PMI increased from June's five-month low of 48.9 to 51.7, its highest level since February.

A sub-index tracking the housing market increased from June's reading of 39.6 to 43.0, the lowest reading since May 2020, when the British economy was experiencing its first coronavirus shutdown. However, it is still well below the 50.0 no-change benchmark.

Since December 2021, the Bank of England (BoE) has gradually increased borrowing rates; on Thursday, it hiked its benchmark interest rate to 5.25%, the highest level in 15 years.

Contrary to home building, the PMI survey revealed that commercial and civil engineering construction accelerated in July.

Building material inflation was substantially lower than the norm for the first half of 2023 due to decreased demand and supplier rivalry.

After plummeting in June to its lowest level since January, business confidence in the industry somewhat increased.

S&P's all-sector PMI, which includes manufacturing and services PMI data reported earlier in the week, decreased from June's 52.5 to a six-month low of 50.9.

According to the BoE's most recent projections, the British economy is expected to expand very little during the following three years. Some analysts believe that a recession is on the horizon.

(Sources: investing.com, reuters.com)