UK Construction Sector Faces Steepest Decline in Over Five Years
The UK construction industry experienced a sharp downturn in July 2025, marking its weakest performance since the early months of the pandemic. According to the latest S&P Global UK Construction PMI® survey, overall activity dropped significantly, driven by notable reductions across all major sectors, particularly in residential and civil engineering projects.
The headline index fell to 44.3, well below the neutral 50 mark that separates growth from decline, and down from 48.8 in June. This signals a rapid contraction in industry output as firms continued to struggle with subdued demand and increasing uncertainty.
One of the most concerning developments was the renewed fall in housing activity, alongside a sharp slump in civil engineering work. Commercial construction also saw a decline, albeit less severe. Around a third of firms cited delays on sites, a lack of new projects, and waning client confidence as key reasons for reduced output.
The employment outlook remained gloomy, with payroll numbers falling for the seventh consecutive month. Companies reported job cuts, hiring freezes, and limited use of subcontractors. Despite this, subcontractor fees continued to rise sharply.
Purchasing levels also fell, although at a slower rate than earlier in the year. Delivery times from suppliers lengthened again after a six-month period of improvement, and while cost pressures persisted, the overall rate of input price inflation was the weakest since January.
Looking ahead, sentiment remained cautious. While some firms anticipate growth over the coming year, overall confidence lags behind long-term averages due to continued economic and political uncertainty — both at home and abroad.
The data suggests that UK construction firms are bracing for a challenging period, with low tender opportunities and fragile customer demand continuing to weigh heavily on the sector.
Source: S&P Global