UK Construction Shows Signs of Strain Despite Housebuilding Uptick
June wasn’t a particularly bright month for the UK construction sector, as activity continued to slide for the sixth month in a row. While housebuilding finally showed a modest improvement, it wasn’t enough to offset steep declines in commercial and civil engineering work.
According to the latest S&P Global UK Construction PMI®, the industry’s overall activity score rose slightly to 48.8 – still below the all-important 50 mark, which separates growth from contraction. This small uptick suggests things aren’t getting worse as quickly, but the sector remains firmly in decline.
Commercial projects were hit hardest, with work falling at the sharpest rate since the early days of the pandemic. Many firms blamed tighter budgets, economic uncertainty, and a slowdown in investment from clients. Civil engineering also took another hit, continuing its downward streak for a sixth consecutive month.
On the brighter side, residential construction posted its first signs of growth since last September. A few companies mentioned an increase in new projects and more promising sales leads, though the improvement was only marginal.
New business, however, remains a worry. Order books continued to shrink, and hiring across the industry declined yet again. Many businesses are trimming staff and cutting costs in response to weaker demand.
Material prices rose sharply in June, especially for essentials like concrete and timber. However, inflation is easing – now at its lowest level since January – and suppliers are generally performing better, despite some global shipping delays.
Perhaps most concerning is the outlook. Fewer firms feel confident about the year ahead, with optimism now at its lowest since late 2022. With economic headwinds persisting, the construction sector looks set for a cautious and uncertain second half of 2025.
Source: S&P Global