UK Construction Activity Shows Signs of Stabilising in May
The latest data suggests the sector may be turning a corner, even though it remains in contraction territory. The headline index rose to 47.9 in May, up from 46.6 in April, signalling the slowest drop in activity since January 2025. While still below the neutral 50.0 mark, this improvement hints that the worst of the slowdown could be easing.
Commercial construction came close to steadying, while residential work continued to struggle, reflecting ongoing affordability issues and weak demand. Civil engineering also saw another month of decline, extending a five-month streak.
Job losses were a key concern, with employment falling at the quickest pace since August 2020. Many firms held off on hiring, citing reduced workloads and rising payroll costs. Meanwhile, new orders declined more gradually, indicating some stability may be returning to the pipeline.
On a positive note, business confidence improved, with many construction firms hopeful that lower interest rates and stronger demand will support recovery over the year ahead.
Despite ongoing inflationary pressures, particularly in materials like insulation and timber, supply chain conditions are showing signs of improvement (S&P Global, 2025).
Overall, the picture is mixed, but optimism is beginning to re-emerge.
Source: S&P Global