Latest construction activity from firms survey

Construction activity declined again in January, though optimism strengthens

UK construction activity declined for the thirteenth consecutive month in January, though at a slower rate than was seen in December, 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 46.4 in January, up from a five-and-a-half-year low of 40.1 in December. A reading above 50 indicates growth in activity, while a reading below 50 signals contraction.

Declines were seen across all three monitored sectors. Housebuilding was the weakest performing sector, with survey respondents citing a lack of new development projects and subdued demand conditions.

Commercial declined at the slowest rate since May 2025, with firms commenting on a boost to activity post-Budget and rising investment sentiment.

Optimism, however, has improved, with 38% of respondents expecting a rise in business activity over the next 12 months and 17% forecasting a reduction. This represented the highest level of confidence for eight months.

Respondents pointed to improved housing market conditions, supported by lower borrowing costs. Public sector work was also reported to be seeing improved pipelines, particularly for infrastructure projects.

Commenting on the findings, Dr David Crosthwaite, chief economist at BCIS, said: ‘Business sentiment appears to be more positive in the latest S&P temperature check with tentative signs that demand could pick up later in the year. We expect building costs to keep rising so any strong increase in demand is likely to be the result of an improvement in wider economic, regulatory and policy conditions – to the point where clients and investors feel comfortable and able to proceed with work.’

S&P Global also reported:

• Risk aversion and fragile client confidence contributed to a decline in new work. 
• Employment numbers fell, though to a lesser extent than at the end of 2025. 
• Higher raw material and staff costs are being passed on by suppliers. 
• Subcontractor charges are rising, despite demand downturn.  
• Sharp fall in purchasing activity in January 2026.  

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