UK construction’s steep decline: PMI trends and 2026 pipeline for project teams
Reviewed by Tom Sullivan
First reported on The Construction Index
30 Second Briefing
UK construction output contracted every month of 2025, with the S&P Global UK Construction PMI at 40.1 in December, its second-lowest level since May 2020 and well below the neutral 50.0 threshold. Civil engineering was the weakest segment at 32.9, while housing (33.5) and commercial work (42.0) saw their fastest declines since May 2020 amid delayed post‑Budget investment decisions and fragile client confidence. Despite sharp falls in new orders, employment and input buying, 37% of firms expect higher output in 2026, citing planned utilities, water and energy infrastructure schemes and anticipated lower borrowing costs.
Technical Brief
- S&P Global UK Construction PMI hit 40.1 in December 2025, up slightly from November’s 39.4.
- December marked the 12th consecutive month with PMI below the neutral 50.0 threshold.
- Civil engineering’s December index of 32.9 still indicated contraction, but at a slower rate than November.
- Total new work volumes fell every month of 2025, though the December contraction eased versus November.
- Around 37% of firms forecast higher 2026 output, versus 20% expecting further decline, indicating net optimism.
- Utilities work, particularly water and energy infrastructure, is the main anticipated driver of future workload recovery.
Our Take
Across the 358 Infrastructure stories in our database, UK-tagged pieces increasingly flag delayed or rephased public works, so a civil engineering PMI as low as 32.9 likely signals further slippage in road, rail and flood-defence pipelines rather than just private-sector weakness.
The housing activity index at 33.5 sits at the lower end of readings in our recent UK coverage and typically correlates with contractors reporting tighter cash flow and more aggressive bidding, which can feed through into thinner margins and higher insolvency risk on fixed-price jobs.
Five consecutive months of improved supplier performance in the UK often show up in our project reports as shorter lead times for key materials, giving clients and contractors a window to renegotiate programmes and procurement strategies before any demand rebound tightens the market again.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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