Britain’s construction sector moved closer to stabilisation in September as the pace of contraction eased to its slowest level since January, although weak orders, falling employment and rising costs continued to underline the fragility of the industry’s recovery.
The S&P Global UK construction purchasing managers’ index rose to 46.1 in September from 44.3 in August, its strongest reading for eight months. The figure was also ahead of the 44.9 forecast by economists.
But the index remained below the 50 threshold separating expansion from contraction, meaning construction activity continued to shrink for a 21st consecutive month.
The improvement suggests the sector may be beginning to emerge from the sharp downturn recorded earlier this year. Yet the latest figures also point to an industry still struggling with weak demand, expensive financing and uncertainty over major investment decisions.
Tim Moore, economics director at S&P Global Market Intelligence, said all three construction sub-sectors had shown “a degree of stabilisation” compared with the rapid declines recorded during the second quarter.
Commercial construction recorded its smallest fall in activity since May 2025, while civil engineering also strengthened.
Residential construction remained the weakest part of the industry, however, as higher borrowing costs and unfavourable market conditions continued to weigh on housebuilding.
The pipeline for future work also remains a concern. New orders were described as “relatively subdued” in September, with clients delaying decisions on major projects amid weak demand and geopolitical tensions.
That caution threatens to limit the extent to which the improvement in activity can translate into a sustained recovery. Construction companies can increase output only so far if customers remain reluctant to commit to new projects.
Cost pressures are also returning. Around a quarter of companies surveyed reported higher purchasing costs during the month, citing fuel surcharges, increased freight costs and more expensive raw materials.
The combination of weak workloads and persistent uncertainty continued to weigh on employment. Construction firms reduced staffing for another month, extending a run of job cuts that began in January 2025.
The figures nevertheless point to a changing composition of demand, with infrastructure-related projects proving more resilient than residential development.
Carly Thorpe, construction and engineering partner at Walker Morris, said the improvement reflected stronger civil engineering activity and favourable operating conditions, with a drier-than-average September helping productivity on construction sites.
“The figures also reinforce the ongoing shift in market activity away from residential development and towards infrastructure-led sectors, including transport, energy and data centres, where investment and project pipelines remain stronger,” she said.
That shift could provide an important source of resilience for the industry as private housebuilding remains constrained by financing costs and weaker market conditions.
For now, however, the headline improvement in the PMI masks an uncomfortable reality. Construction activity is still contracting, new orders remain subdued and companies continue to shed workers.
The September figures therefore offer evidence of a slowdown in the downturn rather than confirmation that Britain’s construction sector has entered a durable recovery.
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