UK Construction Output Falls at Slowest Pace for Three Months

The S&P Global UK Construction PMI rose to 46.1 in September 2026 from 44.3 in August, missing expectations of 45.2 and signaling the slowest decline in construction output since January. Commercial construction showed the greatest resilience, falling only marginally, followed by civil engineering and residential construction with softer contractions. However, total new orders fell at the fastest pace since June amid sluggish market conditions, delayed decisions on major projects, and sharply rising input costs. Employment fell again, with job cuts accelerating the fastest in five months. Demand for construction products and materials also declined, while delivery times lengthened to the greatest extent since May amid shipping delays and supply chain disruptions related to the Middle East conflict. Meanwhile, input cost inflation eased to a seven-month low. Construction firms remained optimistic about the year ahead, although confidence fell to its lowest since May.

The S&P Global UK Construction PMI eased to 44.3 in August of 2026 from 44.7 in the previous month, missing expectations of 45.5. Survey respondents noted fresh weakness in demand conditions from clients that caused a drop in new projects, especially in residential construction starts, amid lower risk sentiment as the war in the Middle East raises both energy prices and borrowing costs. The residential work index slumped to 37.6, while civil engineering activity dropped to 40.5 and commercial construction activity fell to 47.8. Consequently, aggregate construction firms reduced head counts. Input cost inflation picked up on larger transportation bills, raw material prices, and fuel costs. Looking ahead, companies were still upbeat for the year ahead due to expectations of new tender opportunities.

The S&P Global UK Construction PMI rose to 44.7 in July of 2026 from 38.4 in the previous month, extending the rebound from the six-year low of 38.2 in May to reflect some consolidation since the outbreak of war in the Middle East negatively impacted the sector. Commercial work was the subsector that slowed the least, followed by house building activity and civil engineering activity. Aggregate new business received by construction companies fell at a slower pace from June amid a turnaround in tender opportunities. While energy and raw material cost inflation softened from the earlier, improving signs in the Middle East allowed for a pickup in orders. Consequently, employment also fell at a softer pace. Looking ahead, a larger portion of surveyees predicted business expansion in the coming months than those anticipating a decline.