Latest construction activity from firms survey

Construction activity downturn holds as confidence wanes

UK construction activity declined for the fifteenth consecutive month in March 2026, albeit at a slower rate than was reported in February, 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 45.6 in March, up from 44.5 in February. A reading above 50 indicates growth in activity, while a reading below 50 signals contraction.

Total new business fell at the fastest rate in four months in March with survey respondents noting the negative impact of war in the Middle East on client confidence and costs.

New project starts were reportedly lacking as fuel, transportation and raw material prices increased. Respondents said the rapid acceleration in input cost inflation had placed considerable pressure on operating margins.

At a sector level, residential, civil engineering and commercial activity all declined in March, but at slower rates than in the previous month. Housebuilding remained the weakest performing segment while civil engineering saw the least marked fall in activity since May 2025, reportedly due to a gradual turnaround in major infrastructure work.

Some respondents suggested the overall downturn was offset slightly by a return to typical weather conditions.

Dr David Crosthwaite, chief economist at BCIS, said: ‘A continued contraction in construction activity was to be expected from the latest PMI. We’re almost six weeks into the US–Iran conflict, and it is likely that the implications for costs and confidence will take time to ease.

‘The brokering of a conditional, two-week ceasefire between the US and Iran, which includes the reopening of the Strait of Hormuz, is a positive development. However, given the volatility of the conflict so far, construction clients are likely to remain cautious, and new work may stay subdued for some time.

‘A truce is also no guarantee of an immediate reduction in input costs for contractors. Oil prices, for example, have fallen in response to the ceasefire, but shipping through the strait will likely make a tentative return. The risk of the ceasefire collapsing remains significant, and a full return to normality is still some way off – if it happens at all in the near term.

‘For now, UK construction is in a state of limbo. Much will depend on how far materials, fuel and borrowing costs rise, how long they remain elevated, and the extent to which clients maintain risk aversion.’

S&P Global also reported:

• Fastest decline in new orders since November 2025.
• Steeper decline in employment in March compared to February.
• Sharp cutbacks on subcontractor usage and purchasing activity in response to reduced workloads.
• Renewed downturn in supplier performance.
• 48% of respondents reported an increase in their average cost burdens.
• Lowest level of business optimism in three months.

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