The UK construction industry remained in contraction during July, although the pace of decline slowed to its weakest level in four months, according to the latest survey from S&P Global.
The S&P Global UK Construction Purchasing Managers’ Index (PMI) rose to 44.7 in July from 38.4 in June, reaching its highest reading since March. Despite the improvement, the index remained below the 50.0 mark that separates expansion from contraction. Construction activity has now declined every month since January 2025, marking the sector’s longest uninterrupted downturn since the global financial crisis.
Conditions improved across all three major areas of the industry during July, with each recording a slower pace of contraction. Commercial construction remained the strongest-performing segment, posting a reading of 46.8. Civil engineering continued to experience the sharpest decline, with an index of 38.3, while housebuilding showed further signs of stabilisation, recording its least severe contraction since October 2025 with a reading of 41.8.
New business also showed signs of recovery, with incoming orders falling at the slowest rate in 10 months. Survey participants reported an increase in tender activity across commercial developments, residential construction and transport infrastructure projects. However, many firms continued to cite geopolitical tensions and subdued domestic economic conditions as factors weighing on customer demand.
Employment levels continued to decline, although job losses eased to their slowest pace since February. Businesses said they were generally choosing not to replace employees who left voluntarily because of reduced workloads. At the same time, subcontractor availability improved to its strongest level since April 2025.
Purchasing activity also weakened at a slower pace, reaching its strongest level since September 2025. Softer demand for construction materials and fewer transport disruptions helped improve supplier delivery times for the first time in five months.
Cost pressures eased during the month, with input price inflation falling to its lowest level in five months after reaching almost a four-year high in May. Companies that continued to face rising costs pointed to higher fuel surcharges and increasing raw material prices.
Looking ahead, sentiment across the sector remained positive. Around 38% of businesses expect activity to increase over the coming year, while 17% anticipate a decline. Overall confidence improved to its highest level since February, suggesting firms are becoming more optimistic about the outlook despite ongoing challenges.
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