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?
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