The headline seasonally adjusted S&P Global UK Construction Purchasing Managers’ Index (PMI) – an index tracking changes in total industry activity – picked up from 44.3 in August to 46.1 in September, which signalled the least marked downturn in output volumes for eight months.

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.

September data pointed to a solid decline in total new work during September, with the rate of contraction accelerating to its fastest since June. The latest survey also pointed to a renewed decline in subcontractor usage. Demand for construction products and materials fell at a marked pace in September, which continued the downturn that began in December 2024.

Average cost burdens meanwhile increased sharply in September, but the rate of inflation moderated 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.

Tim Moore, Economics Director at S&P Global Market Intelligence, said: “The downturn in UK construction output was the least marked since January. All three sub-sectors have seen a degree of stabilisation relative to the rapid declines reported in the second quarter of 2026. In September, commercial building work saw its smallest fall in activity since May 2025. House building was again the weakest performer as rising borrowing costs and unfavourable market conditions weighed on output.”

“Total new orders were relatively subdued in September as construction firms reported longer sales conversion cycles and clients deferred decision-making on major projects. This was attributed to subdued demand and geopolitical tensions, while some also noted pressure from sharply rising input costs. Latest data indicated that overall input price inflation softened for the fourth month in a row, but this trend seems unlikely to endure given recently escalating fuel prices and transportation costs. Softer order books, elevated inflationary pressures and concerns about rising borrowing costs were all reasons for construction companies to moderate their year ahead growth expectations during September. This led to a sharp drop in business optimism to its lowest since May.”

Source: https://www.pmi.spglobal.com