UK construction activity declined for a 20th consecutive month in August, with house building recording the fastest contraction among the three main sectors, according to data from S&P Global.
The S&P Global UK Construction PMI fell to 44.3 in August from 44.7 in July, remaining below the 50.0 level that separates expansion from contraction. Survey respondents reported subdued demand and a shortage of new projects, particularly in residential construction.
House Building Records Steepest Decline
Activity decreased across all three construction categories during August.
The housing activity index fell to 37.6, representing the sharpest decline among the subsectors and the only category where the pace of contraction accelerated compared with July.
Commercial construction registered an index reading of 47.8, with activity falling at the slowest rate since January. Civil engineering stood at 40.5 and recorded its weakest decline since March.
New Orders Continue to Fall
New business volumes decreased again during August, although the rate of contraction was modest and the slowest since September 2025.
Construction companies cited increased risk aversion following the Middle East conflict and delays in client decision-making as factors affecting new orders. Some survey respondents reported an improvement in infrastructure-related work.
Employment across the sector also declined as companies reported insufficient new business to replace completed projects and continued cost pressures. However, the pace of job losses was modest and the slowest since February.
Subcontractor usage increased for the first time in almost two years.
Purchasing Costs Continue to Rise
Purchasing activity declined sharply during August, with the pace of reduction accelerating from July.
Higher fuel costs, transportation expenses and raw material prices contributed to another increase in purchasing costs. However, overall input cost inflation eased to its lowest level in six months, with some companies reporting more competitive supplier pricing.
Tim Moore, Economics Director at S&P Global Market Intelligence, said: “UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August.”
Construction Firms Remain Cautious on Outlook
Business expectations for the coming 12 months remained subdued and eased from July.
Approximately 38% of survey respondents expect construction output to increase over the next year, while 20% anticipate a decline.
Companies cited subdued client confidence, uncertainty surrounding the domestic economic outlook and concerns related to the Middle East conflict among the factors affecting expectations.
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