Latest construction activity from firms survey

S&P Global report shows construction activity still in decline

UK construction activity declined for the eighth consecutive month in August, albeit at a slower rate than in July, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI)⁽¹⁾.

The PMI, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, registered 45.5 in August, up from 44.3 in July. Anything above 50 signifies an overall increase in activity; anything below 50 represents a decrease.

August saw the lowest degree of business confidence since December 2022 with companies reporting challenging market conditions, intense price competition and economic headwinds.

Elevated business uncertainty and risk aversion among clients were also cited.

Dr David Crosthwaite, BCIS chief economist, said: ‘Confidence in the construction sector is understandably dwindling in the absence of significant output growth. This year has seen the longest continued downturn in activity since early 2020 and while August output was up on July, it was still far from where it needs to be.

‘The problem evidently lies in the UK’s lethargic economic climate. Without radical action from the government to fully flesh out the Infrastructure Pipeline in greater detail, private investment and demand will likely remain lacklustre.’

At a sector level, declines in output were recorded across the board.

Civil engineering saw the steepest decline in output, with business activity falling at the fastest pace since October 2020.

Commercial building was the best-performing sector in August, followed by residential, although both were still well below the neutral 50 threshold.

In the context of civil engineering, survey respondents reported an absence of new projects to replace completed work, reflecting the decline in total new orders in August for the eighth consecutive month.

This contributed to hiring freezes and departing staff not being replaced.

Some firms said they had cut back on recruitment to mitigate rising payroll costs.

S&P Global also reported:

• Sharpest reduction in housing output since February 2025
• Marked fall in subcontractor usage at one of the fastest rates in the past five years
• Slowest rise in subcontractor charges for six months
• Sharpest decline in input buying in three months
• Slowest increase in purchasing prices since October 2024
• Shorter wait times for supplier deliveries, driven by subdued demand for materials and products
• 34% of respondents predict a rise in output in the next 12 months; 22% forecast a reduction

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