UK construction growth cools ahead of election, PMI shows

LONDON (Reuters) - Growth in British construction activity slowed in June as house-building declined, according to a survey on Thursday that showed a slowdown in new orders as some firms took a wait-and-see approach to Britain's July 4 election.

The S&P Global UK Construction Purchasing Managers' Index fell to 52.2 in June from 54.7 in May, below the median forecast of 53.6 in a Reuters poll of economists but still above the 50 threshold for growth.

S&P Global said the slowdown in part reflected firms' uncertainty ahead of Britain's national election in which the opposition Labour Party is widely expected to win by a landslide, according to opinion polls.

"While there were signs of a slowdown in the latest survey period, most notably around housing activity, firms indicated that a slowdown in new order growth was in part related to election uncertainty," Andrew Harker, economics director at S&P Global Market Intelligence, said.

"We may therefore see trends improve once the election period comes to an end."

New orders continued to grow, but the increase was the slowest since February.

Activity in commercial construction and civil engineering rose, but Thursday's survey showed a renewed fall in residential building work.

Firms reported an increase in employment, with the rate of job creation the fastest since August last year.

The Bank of England - which held interest rates at a 16-year high of 5.25% last month - is closely monitoring wage growth and services costs as it considers cutting interest rates this year.

S&P said the cost of some raw materials ticked up last month, though pressure on supply chains eased.

The wider all-sector PMI, which includes results from the larger services and manufacturing sectors earlier this week, dropped to 52.3 from 53.1 in May due to slower growth in the services sector.

(Reporting by Suban Abdulla; Editing by Christina Fincher)

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