UK construction sector downturn deepens as activity hits six-year low
UK construction activity deteriorated sharply in May, with output falling at the fastest pace in six years as weakening demand and rising costs weighed on the sector, survey results showed on Thursday.
The S&P Global construction purchasing managers’ index fell to 38.2 points in May from 39.7 in April, remaining well below the 50-point threshold that separates growth from contraction.
The index has now been below 50 points for 17 consecutive months, and May’s reading signalled the steepest decline in construction activity since May 2020. Excluding that Covid pandemic period, it marked the sharpest contraction since March 2009.
All three major categories of construction work recorded steep declines in output.
Residential construction was the weakest-performing segment, with its activity index falling to 36.0 points. Construction firms cited weak market conditions and the impact of elevated borrowing costs on UK housing demand.
Commercial construction activity also deteriorated, with this sub-index falling to 39.0 points. Survey respondents reported increased client caution amid geopolitical tensions and rising inflation pressures.
Civil engineering activity remained weak, although the pace of decline eased slightly, with the sub-index at 36.2 points.
The survey noted that energy sector and power network projects remained a relative bright spot for infrastructure work.
Despite weaker demand for materials, supplier performance worsened. Delivery times lengthened for a third consecutive month, with the deterioration the most severe since December 2022. Firms surveyed cited international shipping delays and shortages of some raw materials.
Input cost inflation accelerated further during May. Nearly two-thirds of respondents reported higher costs, while only 1% recorded a decline. The resulting increase in purchasing prices was the fastest since June 2022, driven by fuel surcharges, rising energy bills and higher transportation costs.
Subcontractor charges rose at the strongest pace in almost three-and-a-half years.
S&P Global Market Intelligence Economics Director Tim Moore said: ‘Anecdotal evidence suggested that economic uncertainty and rising inflation in the wake of the Middle East conflict had triggered the steepest drop in new work since the beginning of the pandemic.’
Out on Wednesday, the S&P Global UK services PMI business activity index fell to 49.3 points in May from 52.7 in April, dropping below the neutral 50-point mark for the first time since April 2025.
The broader UK composite PMI output index, which combines manufacturing and services activity, declined to 49.7 points in May from 52.6 in April, signalling the first contraction in UK private sector activity in 13 months. This was despite the manufacturing PMI rising to 53.9 points in May from 53.7 in April, its highest level in four years.
The construction PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies in the UK, with survey data collected in the second half of each month.
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