The seasonally adjusted S&P Global UK Construction Purchasing Managers’ Index (PMI) – a headline index tracking changes in total industry activity – registered 44.5 in February, down from January’s seven-month high of 46.4.
The monthly PMI has now been below the 50.0 no-change mark every month for the past 14 months. This means that – according to S&P – UK construction activity has got slower and slower every single month. [Can this really be true? According to the ONS, UK construction output increased by 1.8% in 2025 compared with 2024. – ed]
January’s reading was headed in the right direction – a less bad rate of decline – but February saw the graph point downwards once again.
Survey respondents mostly cited weak order books and a lack of new project starts. Several also noted that exceptionally wet weather had delayed some work on site in February.
Residential building remained the weakest-performing segment in February (index at 37.0) and the rate of decline accelerated since January. Commercial construction activity (46.5) also decreased at a faster pace than in January, but the speed of the downturn was much less marked than seen across the rest of the construction sector.
Civil engineering was the only sub-sector to record a slower fall in activity levels during February. Although still sharp, the latest index reading of 41.0 pointed to the slowest rate of contraction since September 2025.
February data also pointed to a sharp and accelerated decline in total new work across the construction sector. Lower volumes of new business have been recorded in each month since January 2025, according to this survey, although there were some reports of a turnaround in tender opportunities for infrastructure and energy sector work.
Despite all this, expectations of an upturn improved to the highest since December 2024. Around 42% of the survey panel forecast a rise in output levels during the year ahead, while only 12% anticipate a decline. This was attributed to expected new contract wins on major projects and hopes of a broader turnaround in demand conditions. However, many firms also commented on heightened political and economic uncertainty.
Improving business expectations appeared to support close to stabilisation, which contrasted with steep job losses at the end of last year.
Purchasing activity continued to fall sharply in February, with the rate of decline slightly steeper than at the start of 2026. Weaker demand for construction products and materials contributed to a sustained improvement in supplier performance. Lead times have now shortened for seven consecutive months.
Construction companies again faced pressure on their margins from rising input costs. February data signalled the steepest rise in average cost burdens since July 2025. Many firms noted higher prices paid for items such as concrete, copper, insulation and steel. War in the Middle East will likely exacerbate this in the coming months.
Tim Moore, economics director at S&P Global Market Intelligence, which compiles the monthly survey, said: “A sharper downturn in house-building was the main factor behind the setback for UK construction activity in February, following some signs of stabilisation at the start of 2026. Total industry activity has decreased in each month since January 2025 and the latest decline was faster than seen on average over this period. The reduction in output was largely due to sluggish demand conditions, but some firms also noted that exceptionally wet weather had disrupted construction projects.
“Construction companies were hopeful of a turnaround in business activity over the year ahead, with optimism levels hitting a 14-month high in February. This was often linked to forthcoming new projects in the infrastructure and energy sectors, as well as projected improvements in broader economic conditions.
“Sharply rising input costs were a challenge in February. The rate of purchasing price inflation hit a seven-month high as suppliers passed on rising raw material costs, especially metals.”
Brian Smith, head of cost management at Aecom, said: “Firms will be disappointed not to have seen a third month where the needle moves in the right direction, but I’d be surprised if growth declines any further from here. We know from conversations with contractors that pipelines remain strong and we’ll see much of the planned work start to land on site in the coming months, with spring bringing brighter and milder days.
“However, firms can’t let complacency creep in. We’ve seen how sticky inflation has been and, while contractors have so far been allowed to pass on higher costs in tender prices, clients’ appetite to continue will rest on interest rates being cut sooner rather than later. But the contractors that maintain their pipeline and strong margins regardless will be the ones that are leveraging AI and digital tools at every stage to maximise efficiency.”
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