Latest construction activity from firms survey

Construction downturn deepens as new work falls at fastest pace for six years

UK construction activity declined for the seventeenth consecutive month in May 2026, with output falling at its fastest pace for six years, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI).

The PMI, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, registered 38.2 in May, down from 39.7 in April. A reading above 50 indicates growth in activity, while a reading below 50 signals contraction.

Total new business also deteriorated further in May, with new orders declining at the fastest rate for six years. Survey respondents cited project delays, deferred investment decisions and cuts to client budgets, resulting in fewer tender opportunities and weaker demand across the sector. Some firms also reported that domestic political uncertainty had affected market conditions.

Shrinking order books and rising economic uncertainty contributed to the latest decline in activity, while elevated borrowing costs continued to weigh on market conditions. Respondents also highlighted geopolitical tensions and rising inflationary pressures as factors affecting client confidence and investment decisions.

Dr David Crosthwaite, chief economist at BCIS, said: ‘The latest PMI results paint an increasingly concerning picture for the construction sector. Activity has now been contracting for 17 consecutive months and the pace of decline has accelerated to its fastest level in six years.

‘Particularly worrying is the continued deterioration in new orders. Survey respondents reported project delays, deferred investment decisions and budget cutbacks, all of which are reducing tender opportunities and weakening the future pipeline of work.

‘While firms remain broadly positive about the year ahead, confidence has softened as concerns over inflation, borrowing costs and economic uncertainty continue to weigh on the market. The longer these pressures persist, the greater the challenge for businesses seeking to maintain workloads and invest for future growth.’

At a sector level, residential construction recorded the steepest decline in activity during May, with respondents citing unfavourable market conditions and elevated borrowing costs. Commercial activity also deteriorated further, reflecting risk aversion among clients in response to geopolitical tensions and inflationary pressures, while civil engineering activity remained subdued.

Business activity expectations remained positive in May, although the degree of optimism eased to the second-lowest level since December 2022. S&P Global reported that concerns over rising inflation, elevated borrowing costs and unfavourable near-term economic conditions weighed on confidence. Around 31% of respondents predicted a rise in output over the next 12 months, while 25% forecast a reduction.

Employment levels continued to decline in May as a lack of new orders to replace completed projects resulted in lower staffing numbers. Purchasing activity also fell sharply, recording its fastest decline since November 2025.

Input cost inflation remained a significant challenge for the sector. May saw the fastest rise in purchasing costs since June 2022, with firms reporting higher fuel, energy and transportation costs, alongside increases in the price of raw materials.

S&P Global also reported:

• Supplier delivery times lengthened for a third consecutive month
• Vendor performance deteriorated at the fastest rate since December 2022
• Almost two-thirds of firms reported rising input costs, while only 1% reported a decline
• Subcontractor charges increased to the greatest extent for nearly three-and-a-half years

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^{(1) S&P Global UK Construction PMI  - here}