The downturn in UK construction has also eased, and optimism among firms improved – more good news for Andy Burnham’s government, after yesterday’s more upbeat service sector data.

The headline index from S&P Global’s monthly survey jumped to 44.7 in July, up from 34.4 in June, but still below the 50 mark that divides contraction from growth.

New business received by construction companies fell at the slowest pace for 10 months in July. Some firms talked of a recent turnaround in tender opportunities, including for commercial development, residential projects and transport infrastructure work, and confidence levels are now the highest since February.

However, many also said that heightened geopolitical uncertainty and sluggish domestic economic conditions continued to weigh on customer demand.

Tim Moore, economics director at S&P Global Market Intelligence, said:

July data suggests that the performance of UK construction sector has started to stabilise after a sharp downturn throughout the second quarter of 2026. Business activity levels continued to decline in all three main categories, but in each case the rate of contraction was much slower than in June. This was supported by the weakest reduction in new business intakes since September 2025.

A renewed improvement in supplier performance and softer input cost inflation were also positive developments in July. Construction companies widely commented on fuel surcharges and higher raw material prices due to the war in the Middle East, but the overall rate of cost inflation was the lowest for five months.

After the good news from Germany’s manufacturing base, the downturn in the eurozone’s construction sector eased in July.

It is a mixed bag, though.

The latest PMI survey from S&P Global, a closely-watched monthly snapshot of the sector, shows the rate of decline was the slowest for four months, although there was a steeper deterioration in new order intakes, and firms were slightly more pessimist about the coming year.

The headline index rose from 42.8 in June to 44.3 in July.

The rapid inflation in material and other costs following the start of the Iran war on 28 February continued to ease, with cost burdens rising at the slowest rate since before the conflict.

The commercial sector recorded the largest overall drop in activity, followed closely by housebuilding. Civil engineering activity fell slightly, and at the weakest rate over the last six months.

The three largest eurozone economies all recorded declines in construction output during July. France posted the biggest decline, although it was the softest in five months. Italian firms registered only a marginal contraction, while Germany bucked the easing trend to register the steepest fall in output in three months.

Usamah Bhatti, economist at S&P Global Market Intelligence, said:

The construction sector in the eurozone remained in solid contraction territory at the start of the third quarter, with all three monitored sectors continuing the declines seen a month prior. The downturn was also broad-based by nation, as Germany posted a steeper reduction in activity.

July data saw a further softening in cost pressures, however, as the surge in inflation from rapidly rising energy prices following the war in the Middle East eased further since April’s recent record.

This did little to dent pessimism in the year-ahead outlook among the bloc’s construction companies, however. The degree of negative sentiment intensified from a month prior, to reach the most pronounced for three months.

Meanwhile, Wizz Air has swung to a quarterly loss after the Iran war sent fuel costs spiralling.

The Hungarian low-cost airline warned that the industry is set to face challenges for the rest of the year. Its shares fell 4.8% on the FTSE 250 in London.

It posted an operating loss of €183m (£157m) between April and June, compared with a profit of €27.5m a year earlier, despite passenger numbers soaring by 25% to 21.2 million. Revenues increased 5.5% year-on-year to €1.5bn.

Wizz Air blamed a jump in jet fuel costs linked to the surge in global oil prices following the US-Israeli attacks on Tehran in late February, which turned into a protracted war.

Brent crude peaked above $120 a barrel in late April but has since fallen back as negotiators from the US and Iran, helped by mediators, are trying to hammer out a peace deal. Today, Brent is up 0.6% at $79.9 a barrel.

The airline’s fuel bill rose by 39% compared with last year, to €610.5m, which it said reflected 87% higher market prices, partly mitigated by fuel hedges, currency move and cost cutting.

Other airlines – easyJet, British Airways owner IAG and Ryanair – have also been hit, reporting declines in profits in recent weeks.

Wizz Air had previously said it took a €50m hit from the Iran war after having to cancel flights to Tel Aviv in Israel and other routes to the Middle East and Cyprus in March.

While many flights have resumed, the company said it was pivoting from longer-haul Middle East destinations to shorter European routes, such as Spain, Italy, Croatia and Albania. It also said its exposure to the Middle East region was limited and mostly focused on Israel.

Its chief executive, József Váradi, said:

The industry has been extremely volatile over the June quarter due to conflict in the Middle East, elevated fuel prices, and changes in booking patterns.

We are focused on strengthening the core network, improving density and reallocating flying from longer-haul Middle Eastern operations into shorter European sectors.

While we continue to see the build-up of forward bookings, the rest of the year is expected to present both industry challenges and strategic opportunities.

WPP shares have surged as much as 27%, after the advertising company said it was on track with its cost-cutting programme and a drop in quarterly sales was not as bad as feared.

The shares are the biggest riser on the FTSE 250, and are now trading 24.5% higher at 382.5p – on track for their biggest daily jump since 1992.

WPP, which develops advertising campaigns through its global network of agencies such as Ogilvy, VML and AKQA, posted a 2.8% decline in like-for-like sales in the second quarter driven by client losses last year. It flagged an improving quarterly trend in spending from existing customers and a smaller drag from net new business.

Cindy Rose, the chief executive who took the helm last summer, said the company was “firmly on track” with the first phase of its plan “to stabilise the business” which aims to deliver annual cost savings of £100m.

In February, WPP set out a radical restructure to counter the threat posed by the growth of artificial intelligence, including plans to sell assets and job cuts. Aiming to be “a simpler, lower-cost, AI-enabled business”, the London-based company hopes to achieve £500m of annual savings by 2028, at a cost of £400m over two years.

The group is targeting a return to organic growth next year.

Organic growth remains our North Star. While the turnaround of our financial performance will take time to fully flow through, our strong new business wins and improved client retention, as well as progress on cost savings and portfolio actions, demonstrate that we are building a simpler, more competitive and higher-performing WPP.

Analysts at Citi said:

We think consensus 2026 organic growth ‌could prove overly conservative following the first-half ​results. Additionally, the progress on disposals is positive and indicative of ⁠the potential unseen value ​in the ​broader portfolio.

UK housebuilder Persimmon has lifted its outlook, saying it is “well-placed” to benefit from prime minister Andy Burnham’s policy agenda, despite growing costs linked to the Iran war.

The FTSE 100 builder told investors this morning that pre-tax profits were up 15% for the first six months of the year to £168m, following a 13% rise in the number of homes built over the period.

That was despite “challenging” market conditions, following a rise in building costs, and many consumers still struggling to afford homes.

Bosses added that cost pressures were likely to grow in the months ahead. “We expect additional inflationary pressure in 2027 including as a result of the conflict in the Middle East,” Persimmon said in a market update, warning that even its own

It warned that its cost cutting measures might not be enough to fully offset the impact of inflation.

But Persimmon said it was lifting its outlook for the full-year, with plans to complete 12,500 new homes by the end of the year, at the top end of its previous guidance.

The housebuilder is hoping to benefit from Burnham’s policy programme, including plans to boost housing and slash costs for cash-strapped consumers.

Persimmon remains well-placed to drive further growth through our unique set of capabilities. The UK housing market continues to experience both a long-term undersupply of housing and affordability challenges for new homeowners, which is a key focus for the new government.

As the most cost-efficient national housebuilder, with a clear focus on customer value and affordability, a growing land pipeline and expanding outlet network, we are well placed to respond.

Investec’s housing analyst Aynsley Lammin said:

Clearly markets remain challenging but Persimmon continues to be on the front foot and is delivering relatively well.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

In Germany, factory orders rose more than expected in June as Europe’s biggest economy shrugged off disruption from the Iran war.

At the same time, Rheinmetall, the country’s biggest defence company, slashed its outlook after losing a big government contract.

New manufacturing orders increased by 3.1% from the previous month, according to Germany’s statistics office, comfortably beating analysts’ expectations of an 0.3% increase. However, stripping out large orders, new orders dipped 0.5%.

Over the three months to June, new orders rose 1.3% from the previous three months.

Machinery and equipment led the way with 12.7% growth along with computer, electronic and optical products, up 22.7%. There were big orders in both sectors. The car industry reported a 3.8% rise.

In contrast, orders plunged 41.7% for aircraft, ships, trains and military vehicle equipment, with only partial data in this sector available at the moment.

Foreign orders were up 0.2% in June, with orders from the euro area falling by 14% and orders from outside the eurozone rising by 10.2%. Domestic orders rose by 7.8%.

Meanwhile Rheinmetall cut its sales forecast for this year after losing a big German naval contract worth several billion euros.

Rheinmetall now says annual revenues could be as low as €13.7bn rather than the previously forecast €14bn at the low end of its targeted range. The arms maker stuck to its operating margin forecast.

This comes after Germany cancelled the F126 frigate programme in June, which Rheinmetall said could reduce its revenues by up to €300m.

Asian shares retreated on Thursday after the previous day’s tech rally, as investors turned cautious again, following in Wall Street’s footsteps where Elon Musk-run SpaceX plunged 13.6% and chipmaker AMD tumbled 7%.

Both delivered strong quarterly results but investors freaked out about SpaceX’s ballooning AI spending while AMD was hit by Musk saying SpaceX planned to buy its AI chips from rival Nvidia. While SpaceX’s quarterly revenue nearly doubled year-on-year to $7.8bn, capital spending jumped to $18.3bn – more than six times last year’s level – with most of it going towards AI.

Japan’s Nikkei fell 0.9% while Hong Kong’s Hang Seng dropped 1.9% and South Korea’s Kospi lost 4.6% and China’s CSI 300 index dipped 0.3%.

Brent crude is holding below $80 a barrel, dipping 21 cents, or 0.3%, to $79.22 a barrel.

The Agenda

• 8.30am BST: Eurozone construction PMI for July

• 9.30am BST: UK construction PMI for July

• 1.30pm BST: US Initial jobless claim for week to 1 August