UK construction output falls the least in four months

The headline S&P Global UK Construction PMI rose to 47.9 in May 2025 from 46.6 in April, signaling the slowest contraction in construction activity since January.

UK construction output falls the least in four months

While still below the 50.0 threshold that separates growth from decline, the improvement suggests a tentative stabilization in sector conditions. Output and new business volumes continued to fall, but at softer rates, pointing to a possible bottoming-out after months of weakness. Business sentiment provided a bright spot, with confidence among construction firms reaching its highest level since December 2024, reflecting hopes for a rebound in the housing market, increased infrastructure spending, and potential interest rate cuts later in the year. However, the overall picture remains fragile. Employment trends were particularly concerning, with job shedding accelerating to its steepest pace since August 2020. Companies attributed this to ongoing weak demand, heightened cost pressures, and efforts to streamline operations. Residential construction was again the weakest-performing segment, weighed down by high borrowing costs and affordability issues, while commercial building saw only a modest decline. Civil engineering activity remained relatively stable.

Purchasing activity dips

Purchasing activity and the use of subcontractors both declined, which helped ease supply chain pressures and led to the fastest improvement in delivery times since mid-2021. On the cost front, input price inflation remained elevated but showed signs of easing from the peaks recorded in March. Higher payroll expenses were passed on by suppliers, especially for materials such as aggregates, insulation, and timber. In contrast, fuel costs provided some relief, continuing their downward trend. Looking ahead, firms are cautiously optimistic. Many are pinning hopes on a recovery in housing demand, support for infrastructure development, and monetary policy easing to reinvigorate the sector. Nonetheless, lingering concerns over the broader UK economic outlook—including persistent inflation, consumer uncertainty, and geopolitical risks—continue to cast a shadow over the construction industry’s near-term prospects.