The UK construction sector showed further signs of stabilizing in July, although activity remained firmly in contraction for a nineteenth consecutive month. The S&P Global UK Construction PMI rose to 44.7 from 38.4 in June, its highest level in four months but still below the 50 threshold that separates expansion from contraction. While the reading points to another decline in overall activity, it also suggests the sharp downturn seen through the second quarter has begun to ease.
The improvement was broad-based across the sector. Commercial construction proved the most resilient, with its activity index rising to 46.8, while house building recorded its least severe contraction since October 2025 at 41.8. Civil engineering remained the weakest segment at 38.3, though even there the pace of decline moderated. According to S&P Global, the slower contraction reflected the smallest fall in new orders since September 2025, with some firms reporting improving client enquiries and a revival in tender opportunities despite generally subdued market conditions.
Encouragingly, business optimism strengthened to its highest level since February as firms became more confident about activity over the coming year. Construction companies also benefited from improving supplier performance and the slowest rise in input costs for five months. Although respondents continued to cite higher fuel and raw material costs linked to the Middle East conflict, easing cost pressures and tentative signs of recovering demand suggest the sector may be moving beyond its weakest phase, even if a sustained recovery has yet to take hold.
Data Summary
| Component | July | June | Trend |
|---|---|---|---|
| Construction PMI | 44.7 | 38.4 | ▲ Four-month high |
| Commercial Activity | 46.8 | N/A | ▲ Slowest contraction |
| House Building | 41.8 | N/A | ▲ Least severe decline since Oct 2025 |
| Civil Engineering | 38.3 | N/A | ▲ Contraction eased but remained weakest |
| Overall Activity | < 50 | < 50 | ▼ 19th consecutive month of contraction |
Key Takeaways
- UK Construction PMI rose to 44.7 in July from 38.4, reaching a four-month high and signalling that the sector’s downturn is easing, although activity remains in contraction.
- The sector has now contracted continuously since January 2025, marking its longest period of decline since the Global Financial Crisis.
- All three major segments improved, with commercial construction proving the most resilient (46.8), while house building recorded its mildest contraction since October 2025.
- Survey respondents reported early signs of improving client demand and more tender opportunities, resulting in the smallest decline in new orders since September 2025.
- Business confidence climbed to its highest level since February, suggesting firms expect activity to improve over the coming year.
- Cost pressures eased to a five-month low, although companies continued to cite higher fuel and raw material prices linked to the Middle East conflict.
