UK construction decline moderates in September but market "sluggish"

The UK construction sector remained in decline in September, numbers on Tuesday showed, but the pace of contraction eased.

According to S&P Global, the construction purchasing managers' index rose to 46.1 points in September, from 44.3 in August. Moving closer to the 50-point neutral mark, the reading suggests the pace of decline slowed last month.

"Slower rates of contraction were seen in the residential, commercial and civil engineering segments. Commercial construction (index at 48.5) saw the greatest resilience, with business activity falling only marginally and at the weakest pace since May 2025. Housing activity (40.7) remained the worst-performing area of the construction sector," S&P Global said.

"Many survey respondents linked lower output to sluggish market conditions, attributed to geopolitical tensions and elevated borrowing costs. September data pointed to a solid decline in total new work during September, with the rate of contraction accelerating to its fastest since June. Construction firms often noted headwinds from delayed decision-making on major projects and sharply rising input costs."

S&P Global said "cost burdens" rose markedly in September, but the rate of inflation cooled to a seven-month low.

"Around 25% of the survey panel signalled a rise in their purchasing costs, while 3% noted a decline. Fuel surcharges, higher freight costs and rising raw material prices were widely reported," S&P Global said.

"Looking ahead, construction companies are still optimistic on balance about their growth prospects for the next 12 months. Around 31% of survey respondents expect a rise in business activity whereas 21% predict a decline. However, the overall degree of confidence signalled during September was the lowest for four months and much weaker than in August."

The construction PMI features a panel of around 150 construction companies, with responses collected in the second half of the month.

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