- The UK construction PMI came in at 38.4 in June, up marginally from May’s six-year low of 38.2 but still deep in contraction territory and below the 40.0 expected.
- Housebuilding has hit a 2026 low amid the ongoing construction downturn, with activity shrinking at its sharpest pace so far this year.
- Civil engineering collapsed to 22.1, marking its weakest reading since April 2020.
- The construction sector has faced subdued housing sales, higher borrowing costs, and elevated business uncertainty as key challenges.
- Output in the construction sector has now fallen every single month since January 2025, with the latest drop being the second-fastest since the start of the pandemic.
- Despite the challenges, 38% of construction firms surveyed expect an increase in business activity over the year ahead.
The UK construction sector continues to struggle, with the S&P Global construction PMI rising to 38.4 in June, a slight improvement from May's six-year low of 38.2.1
Despite this marginal increase, the sector remains firmly in contraction, with housebuilding activity hitting a 2026 low.2
Output has now fallen every month since January 2025, marking the second-fastest decline since the pandemic began.5
Housebuilding was particularly hard hit, with activity shrinking at its sharpest pace this year.
Civil engineering also faced significant challenges, collapsing to a PMI of 22.1, its weakest since April 2020.3
Firms attribute these declines to subdued housing sales, elevated borrowing costs, and heightened business uncertainty.4
Tim Moore, economics director at S&P Global Market Intelligence, noted that new work decreased to the least marked extent since March, despite ongoing market challenges.
However, there are signs of optimism, with 38% of construction firms expecting an increase in business activity over the next year, and easing cost pressures reported in June.6
Kiran Raichura, chief commercial real estate economist at Capital Economics, stated that the construction sector appears to have stabilized, suggesting that activity may have reached a floor.
Despite the positive outlook, the level of activity remains low, particularly in the commercial and housing markets.
“Civil engineering activity dropped to 22.1, its weakest reading since April 2020, while commercial construction recorded a slower downturn in May. The report also noted easing cost pressures and a rebound in business optimism, with 38% of construction firms expecting higher activity over the next year.”
Guido Fawkes
Peterborough Matters
