Latest construction activity from firms survey

Construction activity declined again in December, though not as sharply

UK construction activity declined for the twelfth consecutive month in December, though at a slightly slower rate than was seen in November, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI)⁽¹⁾.

The PMI, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, registered 40.1 in December, up from 39.4 in November. A reading above 50 indicates growth in activity, while a reading below 50 signals contraction.

Steep reductions in activity were recorded across the housing, commercial and civil engineering sectors, with housing and commercial decreasing to the greatest extent since May 2020.

Survey respondents reported fragile confidence among clients and subdued underlying demand, with firms also citing delayed investment decisions ahead of the Autumn Budget which wasn’t delivered until the end of November.

Conversely, business optimism was higher than was reported in November, with 37% predicting a rise in output levels in the year ahead, the highest level of confidence seen for five months. Lower interest rates and an improvement in domestic economic conditions were among factors suggested as being helpful to boost construction activity in 2026.

Commenting on the data, Dr David Crosthwaite, chief economist at BCIS, said: ‘The industry ended the year facing familiar challenges, with weak demand and subdued confidence continuing to weigh on activity levels.

‘While the pace of decline has eased slightly, there was little in the Autumn Budget to deliver an immediate uplift in workloads, particularly across housing and commercial construction. That said, there are pockets of resilience, with some firms reporting stronger pipelines linked to energy, water, defence and healthcare projects.

‘At a time when clients may be hesitant to commit, clear explanations of cost drivers, risk allowances and options for value engineering are crucial. It is also important to help clients understand the cost and programme implications of delaying projects compared with proceeding.’

S&P Global also reported:

• A further reduction in total new orders, though not as steep a decline as was seen in November.
• Lack of new work and rising operating costs produced a steep decline in employment.
• Price discounting by some suppliers, largely in response to subdued demand, as well as improved stock availability and more delivery slots.
• A further reduction in subcontractor usage, and the fastest upturn in subcontractor availability for seven months.

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^{(1) S&P Global UK Construction PMI  - here}