UK construction output continued to shrink in September, though the pace of decline eased to its slowest in three months, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI) released Monday.
The headline PMI edged up to 46.2 in September from 45.5 in August, marking its highest reading since June. Despite the improvement, the index remained below the neutral 50.0 mark for the ninth consecutive month, indicating that the sector is still contracting.
Residential construction showed modest improvement with a PMI of 46.8, while civil engineering remained the weakest area at 42.9, though both segments experienced slower declines than in August. Commercial construction was the exception, seeing a slightly faster drop with a reading of 46.4.
New orders continued to fall for the ninth straight month, but the decrease was minimal and the slowest in that period. Construction firms pointed to weak demand, economic uncertainty, and hesitant clients as ongoing obstacles to converting opportunities into contracts. Some companies, however, noted new wins linked to energy projects.
Employment in the sector declined for the ninth consecutive month as firms continued hiring freezes and did not replace departing staff due to lower workloads, although some reported hiring more apprentices.
Supply conditions improved slightly in September, with faster delivery times reflecting reduced pressure on supplier capacity. Purchasing of inputs fell for the tenth consecutive month.
Cost pressures remained notable, with purchasing prices rising sharply during September. While inflation accelerated from August, it was still below the average seen in the first half of 2025. Companies cited higher wages and increased energy, raw material, and transport costs as main drivers.
Business confidence stayed subdued, largely unchanged from August’s 32-month low. Some construction firms expressed optimism that infrastructure investment, energy sector demand, lower interest rates, and planning approvals could provide a boost, but these factors were tempered by concerns over the UK economic outlook, capital expenditure reductions, and client uncertainty ahead of the Autumn Budget.
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