UK construction downturn eases, but remains near five-year low

7th Jan 2026 09:13

(Sharecast News) - The UK construction downturn eased slightly in December, though the sector still experienced sharp falls in housing, commercial and civil engineering activity, according to data out on Wednesday from S&P Global.

The S&P Global UK construction purchasing managers' index (PMI) rose to 40.1 over the final month of 2025, up from a five-year low of 39.4 in November.

This was the 12th straight month below the neutral 50-point level - which separates contraction from growth - and the second-lowest reading since May 2020.

Civil engineering was the weakest-performing sub-sector of construction, with the activity index at just 32.9 in December, though slightly up from November.

However, housing activity (33.5) and commercial construction (42.0) recorded their steepest rates of decline since May 2020.

On a brighter note, business activity expectations rebounded to a five-month high, with 37% of purchasing managers predicting a rise in output levels over the coming year.

The survey pointed to new work in the utilities sector, specifically related investment in water and energy infrastructure, was cited by a number firms, while improving domestic economic conditions are also expected to boost activity over 2026.

Nevertheless, as business activity continues to fall, employment levels across the sector still saw "relatively sharp reductions", the report said.

"UK construction companies once again reported challenging business conditions and falling workloads in December, but the speed of the downturn moderated from the five-and-a-half-year record seen in November," said Tim Moore, economics director at S&P Global Market Intelligence.

"Many firms cited subdued demand and fragile client confidence. Despite a lifting of Budget-related uncertainty, delayed spending decisions were still cited as contributing to weak sales pipelines at the close of the year."