Latest construction activity from firms survey

Construction downturn deepens as housebuilding activity falls sharply

UK construction activity declined for the twenty-second consecutive month in October 2026, 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 43.6 in October, down from 46.1 in September. A reading above 50 indicates growth in activity, while a reading below 50 signals contraction.

Contractions were recorded across all three major construction sectors, although residential activity was the weakest-performing by some margin. Its reading was the lowest since December 2025 with anecdotal evidence citing low consumer confidence, elevated risk aversion and headwinds from rising borrowing costs.

The contraction in civil engineering was the slowest since May 2025 while commercial activity reported the most positive reading. Total new work received by construction companies fell at the sharpest pace since June.

Commentary by survey respondents pointed to more cautious budget setting among clients and fewer opportunities to tender although some report order books had improved due to higher infrastructure spending. Data centre, utilities and energy network projects were referenced specifically.

Dr David Crosthwaite, chief economist at BCIS, said: ‘S&P Global’s PMI findings paint a stark picture of an industry where activity has been in decline for almost two years. Looking at its data over a longer period, this seems to be more than a simple downturn and perhaps something more structural. The roots of the slowdown stretch back to the 2021-22 energy crisis, with only a brief respite in 2024.

‘Construction has always been cyclical, and there are reasons to remain optimistic. But we cannot keep dismissing persistent contraction as another dip in the cycle. The industry is struggling to regain momentum, and the longer this continues, the harder it becomes to argue that recovery is just around the corner.

‘We may need to confront the possibility that this is the new normal, rather than a temporary low. The Autumn Budget provided some encouraging measures, but against a backdrop of geopolitical uncertainty and sustained cost pressures, they may fall well short of what’s needed to drive a substantial increase in construction demand across sectors.’

Purchasing activity declined sharply in October according to S&P’s latest survey. This was largely due to a reported lack of new work to replace completed projects. Input cost inflation accelerated from September’s seven-month low, with purchasing prices rising at the fastest pace since June.

There were many reports of fuel surcharges, higher energy costs and higher raw material prices, including for aggregates, concrete, electrical items and steel. Looking ahead, more than one-third (34%) of construction companies surveyed expected their output levels to increase in the next 12 months. 27% predicted a decline.

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