UK Construction Sector Struggles: 6th Month of Decline Despite Housing Uptick

UK Construction Activity Continues Downward Trend
The UK construction sector remained in contraction in June 2025, marking the sixth straight month of decline, according to the latest S&P Global UK Construction PMI®.

📉 Key Findings:

Overall PMI: 48.8 (up from 47.9 in May, but still below 50 = contraction)

House building rebounds slightly (50.7) – first growth since September 2024

Commercial construction (45.1) – worst drop since May 2020

Civil engineering (44.2) – weakest-performing sector

*(PMI >50 = expansion, <50 = contraction)* Sector Breakdown: Housing vs. Commercial & Civil Engineering 1. Residential Construction: Slight Recovery (50.7) ✅ First expansion in 9 months ✅ Some firms report increased project pipelines ⚠️ But growth remains marginal 2. Commercial Construction: Sharp Decline (45.1) 📉 Fastest drop in 5+ years 📉 Businesses cite: Weak economic conditions Reduced investment spending 3. Civil Engineering: Worst Performer (44.2) 📉 Ongoing slump due to fewer infrastructure projects Why Is the UK Construction Sector Struggling? 🔹 New orders fell for 6th straight month 🔹 Fewer tender opportunities & stiff competition 🔹 Clients hesitant due to economic uncertainty 🔹 Employment down (cost-cutting & weak demand) 🔹 Rising material costs (concrete, timber, insulation) 💡 Silver lining: Input cost inflation slowed (3rd consecutive month) Supplier delays improved (best in a year) Business Confidence Hits 2.5-Year Low 📊 Only 34% of firms expect growth in next 12 months 📊 18% predict further decline 📊 Lowest optimism since December 2022 Tim Moore, S&P Global Economics Director: "The commercial and civil engineering slump is dragging down the sector. While housing shows tentative recovery, weak demand and fragile client confidence persist." What’s Next for UK Construction? 📌 If housing demand stabilizes, sector could see gradual recovery. 📌 Commercial & civil engineering may struggle until business investment picks up. 📌 Material costs & labor shortages remain key challenges. Will the Bank of England’s interest rate decisions help revive construction activity?