Slowest decline in UK construction output for four months

Downturn in UK construction sector showed signs of easing in May; Business activity expectations edged up 

THE headline S&P Global UK Construction Purchasing Managers’ Index (PMI) posted 47.9 in May, up from 46.6 in April, to signal the slowest reduction in output volumes since January. Lower business activity has been recorded throughout 2025 to date, but the latest fall was only modest.

House building was the weakest-performing segment in May (index at 45.1). Moreover, the downturn in residential construction work accelerated since April amid ongoing reports of subdued demand conditions.

Civil engineering also decreased at a solid pace in May (45.9), which extended the current period of contraction to five months. Meanwhile, commercial work (49.5) fell only marginally and the rate of decline was the slowest since the downturn began in January.

Total new work received by UK construction companies decreased to the least marked extent for four months in May. Survey respondents attributed reduced order intakes to delayed decision-making among clients and cutbacks to capital spending budgets.

Although a strong rate of input price inflation continued in May, overall cost pressures continued to drift down from the 26-month high seen in March. Aggregates and concrete…were commonly reported as up in price.

Meanwhile, business activity expectations for the year ahead edged up to the highest since December 2024. Around 39% of the survey panel forecast a rise in output levels, while 16% predict a decline.

Positive projections were attributed to hopes of a turnaround in housing market conditions, greater infrastructure work, and the impact of lower borrowing costs on client demand. This was balanced against concerns about the general UK economic outlook and the negative impact of rising business uncertainty on sales pipelines.

Tim Moore, economics director at S&P Global Market Intelligence, said: ‘The construction sector continued to adjust to weaker order books in May, which led to sustained reductions in output. However, the worst phase of spending cutbacks may have passed as total new work fell at a much slower pace than the near-five-year record in February.

‘Housing activity was the weakest-performing segment in May as demand remained constrained by elevated borrowing costs and subdued confidence. Commercial work was close to stabilization after a marked decline in April, suggesting that fears about domestic economic prospects have abated after the initial shock of US tariff announcements.’

‘Output growth expectations across the UK construction sector recovered to the highest so far in 2025. Survey respondents mostly cited a general improvement in sales projections as well as a potential tailwind from falling interest rates over the year ahead.’