UK Construction Slows Again, But Decline Less Severe in August
The UK construction sector continued to shrink in August 2025, though the fall was not as steep as in July. The latest industry survey showed that activity dropped for the eighth month in a row, keeping pressure on builders across the country.
The Construction PMI®, which tracks overall industry performance, recorded 45.5 in August. While this was slightly better than July’s score of 44.3, it remained below the neutral 50.0 mark. This means that, overall, construction work is still contracting rather than growing.
Housing and Civil Engineering Struggle Most
House building was one of the hardest-hit areas, posting its sharpest fall since February. Civil engineering also weakened, marking its worst result since late 2020. Commercial projects, such as offices and retail spaces, performed better, showing only a small slowdown.
New Orders and Jobs Under Pressure
Demand for new projects stayed low in August, with firms reporting tough market conditions and strong competition on prices. As a result, many businesses reduced staffing. Employment numbers fell at the fastest rate since May, with recruitment freezes and fewer subcontractors being used.
Costs Easing, Confidence Falling
There was some good news on costs. Supplier delays shortened and price rises slowed to their weakest pace in almost a year. However, this improvement largely reflected a lack of demand rather than stronger supply.
Confidence in the year ahead also slipped. Only around a third of companies expect growth, the lowest level of optimism since December 2022. While cheaper borrowing costs and potential new infrastructure schemes could offer some relief, uncertainty about the wider economy continues to weigh on the sector.
Source: S&P Global