UK Construction Sector Shows Signs of Stabilisation Despite Ongoing Contraction

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Although construction activity decreased for the fourth consecutive month in April but optimism among buyers increased as output growth is expected in the coming year.

The S&P Global UK Construction Purchasing Managers’ Index (PMI) rose slightly to 46.6 in April, up from 46.4 in March. However, it remained below the neutral 50.0 mark for the fourth consecutive month, indicating continued contraction in the sector. That said, April marked the slowest rate of decline in output for three months.

Looking ahead, sentiment among construction firms is cautiously optimistic. Around 41% of businesses surveyed expect output to increase over the next 12 months, while only 18% foresee a decline. This reflects the highest level of business confidence since December 2024.

Residential construction showed relative resilience, with the rate of contraction easing to its slowest so far in 2025. The sub-index for housing stood at 47.1, making it the best-performing segment of the three measured.

Civil engineering remained the weakest sector, posting a reading of 43.1 amid a sharp decline in activity due to a lack of new projects to replace completed ones.

Commercial construction also struggled, with activity falling for the fourth consecutive month. The rate of decline accelerated to its fastest since May 2020, driven by ongoing business uncertainty and concerns over the wider UK economic outlook.

Tim Moore, Economics Director at S&P Global Market Intelligence, commented:
“UK construction firms have faced a challenging start to the year, with economic headwinds and client hesitancy dampening demand for new work. Although output continued to fall in April, the rate of decline slowed thanks to more stable residential and civil engineering activity.

“Commercial construction, however, weakened further, as clients became more risk-averse and delayed major investment decisions.

“Despite a drop in purchasing activity, cost pressures remained high, with prices for raw materials and labour continuing to rise.

“Encouragingly, business expectations for the year ahead improved slightly in April, driven in part by hopes of recovery in the residential building sector.”